A Longer Story Than One President

The closure of large mental institutions and the shift toward community-based care began nearly two decades before the 1980s and involved both parties over several administrations:

• 1963 – President John F. Kennedy signed the Community Mental Health Centers Act, envisioning local treatment centers to replace state hospitals.
• 1965 – President Lyndon B. Johnson signed Medicaid, which included the Institutions for Mental Diseases (IMD) exclusion. This rule made state mental hospitals ineligible for federal reimbursement and quietly created a financial incentive for states to discharge patients.
• 1967 – Governor Ronald Reagan (California) signed the Lanterman-Petris-Short Act, a bipartisan California law that limited involuntary confinement and promoted patient rights—humane in intent but under-funded in practice.
• 1980 – President Jimmy Carter signed the Mental Health Systems Act to rebuild national coordination.
• 1981 – President Ronald Reagan replaced that program with broader block grants to states, reducing federal oversight and funding.

Even before the 1960s, the U.S. had state psychiatric hospitals, not a unified federal system. The federal government ran a few specialized facilities (mostly for veterans or federal prisoners), but the large asylums and state hospitals were always state-run.

When Kennedy announced his 1963 Community Mental Health initiative, it wasn’t to expand federal hospitals, it was to replace the existing state institutions with local community centers.

Congress funded some, but:

• Fewer than half the planned centers were ever built,
• Many lacked operating budgets, and
• No federal commitment existed to maintain them long-term.

The movement to close asylums began in the 1950s for three main reasons:

• The development of psychiatric drugs (Thorazine, 1954) that made outpatient care seem viable,
• Growing civil-rights concerns over involuntary confinement, and
• Rising state costs for huge facilities.

By the late 1960s, long before Reagan’s presidency, most states were already closing beds. From 1955 to 1975, the U.S. went from roughly 560,000 state psychiatric beds to fewer than 200,000 — a drop of almost two-thirds before Reagan entered office.

So there was never a complete national system to “shut down.” What existed was a patchwork of state facilities, already overburdened, underfunded, and politically unpopular by the 1950s.

The United States never had a fully funded, federally coordinated network of mental institutions to “shut down.” By the time Reagan was president, most had already closed, and the promised community system had never materialized. His policies reflected a long-standing federal trend toward devolving responsibility to the states, not a single act of destruction.