In Thinking About Crime, social scientist James Q. Wilson cautioned against focusing on the “root causes” of disorder. Public policy, Wilson argued, should not try to remake society but instead concern itself with what’s practical and possible: incapacitating chronic offenders, creating clear incentives, and providing structure for those who can’t control themselves.
The root-cause mindset has long driven ineffective mental-health policy. The belief that addressing adverse social conditions would prevent mental illness has put mental-health professionals at the center of social reform, with a broad mandate of addressing crime, dependency, and other complex problems. It hasn’t worked.
Finally, a reason to check your email.
Sign up for our free newsletter today.
An executive order signed by President Trump last week marks a much-needed course correction from social advocacy to pragmatism. “Ending Crime and Disorder on America’s Streets” declares that “vagrancy, disorderly behavior, sudden confrontations, and violent attacks”—often a function of untreated serious mental illness—be addressed through civil commitment and humane treatment in long-term institutional settings. For this effort to succeed, the most urgent priority is expanding the number of available inpatient psychiatric beds. The U.S. currently has a significant shortage.
Serious mental illnesses, such as schizophrenia and other psychotic disorders, affect an estimated 14.6 million Americans. Outcomes for these individuals are often grim, with poor physical health, limited employment prospects, financial instability, social isolation, and frequent involvement with the criminal-justice system. An estimated one-third of the total homeless population has untreated serious mental illness. As the executive order notes, “the overwhelming majority of [homeless] individuals are addicted to drugs, have a mental health disorder, or both.”
These poor outcomes reflect how disconnected current mental-health policies have become from reality. From New York to San Francisco, many individuals with serious mental illness cannot lead safe, productive lives without oversight and structured support. Yet taxpayer-funded mental-health programs often ignore this fact—leaving both the mentally ill and the public less safe.
This policy failure can be traced back to the 1960s, when the deinstitutionalization movement began, shifting patients out of state-run psychiatric hospitals. Though well-intentioned, deinstitutionalization is now widely recognized across the political and ideological spectrum as having left many of the severely mentally ill worse off.
Asylums, often maligned today, were originally established to provide non-carceral oversight and intensive therapeutic care as a humane alternative to poorhouses and jails. But with the advent of antipsychotic medications in the late 1950s and the rise of a politically influential “mental-health” movement claiming (without substantiation) that mental-illness prevention was possible, policymakers and the public were persuaded that voluntary outpatient treatment could suffice for nearly everyone. Mental-health professionals, increasingly focused on social reform and a larger population of the “worried well,” argued that the asylum system was obsolete. In its place, they promoted a new model: the community mental-health center.
There was no evidence to suggest that this new approach would work. In fact, as Gerald N. Grob and Howard H. Goldman write in The Dilemma of Federal Mental Health Policy, results from a mid-1950s evaluation of outpatient clinics as asylum alternatives “proved disheartening.” In one study of patients admitted to mental hospitals, 504 were screened with the goal of referring them to outpatient clinics. “Only 57 were identified as candidates,” write Grob and Goldman. “Twenty of the 57 were referred; and six were accepted by clinics for treatment, of whom only two kept appointments and demonstrated any improvement.” The patients clinics did serve typically faced “problems that accompanied the strains and stresses of everyday life”—not the severe mental illnesses that require intensive oversight and hospital care.
In what Daniel Patrick Moynihan has described as the “altruistic mode of redefinition,” activists came to view institutionalization as an illegitimate form of social control and mental illness as merely a “label.” Today, a thicket of legal constraints reinforces this outlook—most notably the Supreme Court’s 1999 Olmstead v. L.C. decision, which requires that patients receive community-based services rather than inpatient care whenever “appropriate.”
Olmstead did not outlaw institutional care—and, in fact, Justice Anthony Kennedy’s concurring opinion emphasized that “it would be a tragic event … to be interpretated so that States had some incentive, for fear of litigation, to drive those in need of medical care and treatment out of appropriate care and into settings with too little assistance and supervision.” But Olmstead has often been misapplied to block inpatient care even for individuals clearly unable to function outside a hospital setting. The Department of Justice has further entrenched this misreading, pressuring states and counties into consent decrees that elevate ideology over clinical evidence.
President Trump’s executive order wisely calls for a reassessment of these legal constraints, directing Attorney General Pam Bondi to seek the reversal of judicial precedents and to terminate consent decrees that obstruct access to institutional care for the seriously mentally ill.
Yet the true driver of deinstitutionalization was financial, not judicial. When Medicaid was enacted in 1965, it included a provision known as the “Institutions for Mental Diseases (IMD) exclusion,” which barred federal reimbursement for care provided in psychiatric hospitals. This created a powerful incentive for states to move patients out of asylums and into much less costly—and often inadequate—community-based settings. As Richard Frank and Sherry Glied explain in Better But Not Well, efforts to establish community mental health centers were “vastly overshadowed by Medicaid in terms of its influence on the rate of decline of [the] number of patients treated in public mental hospitals.”
Today, state hospital bed capacity is down more than 97 percent from peak capacity, adjusted for population. While the IMD exclusion remains in place, simply maintaining current bed capacity is often financially unworkable for states.
With so few psychiatric beds remaining, most now serve forensic patients—mentally ill individuals already involved in the criminal-justice system who have a constitutional right to be restored to competency. This further reduces inpatient capacity for civil patients in need of hospital-level care. Even so, inmates in 26 states wait a median of 60 days for a psychiatric bed, according to research by the Treatment Advocacy Center. At least 12 states have been sued for failing to provide timely treatment.
That financial incentives, not broad social reform mandates, ultimately emptied state hospitals amplifies Wilson’s point about what works in public policy. Moynihan put the problem plainly in 1999: “We have emptied state mental hospitals, but we have not provided commensurate outpatient treatment. Increasingly, individuals with mental illnesses are left to fend for themselves on the streets, where they victimize others or, more frequently, are victimized themselves.” That was more than 25 years ago—things have only gotten worse since.
The executive order promotes expanded use of Assisted Outpatient Treatment (AOT)—a tool that remains too rare and underfunded. Studies of New York’s AOT program, known as Kendra’s Law, show that court-ordered outpatient care can significantly reduce hospitalizations, arrests, and homelessness among the seriously mentally ill. But AOT has limits. For the most impaired individuals, outpatient care cannot begin until inpatient stabilization has occurred.
The executive order rightly directs the Department of Health and Human Services to reallocate discretionary funds toward inpatient treatment. But executive action alone won’t suffice. As long as the IMD exclusion remains in place, states face a powerful fiscal disincentive to expand public psychiatric bed capacity. Congress must repeal the IMD exclusion and allow Medicaid to cover psychiatric hospitals as it does nearly every other medical setting. Anything less will blunt the impact of the executive order and leave the nation’s most vulnerable without the care they need.
