Category Archives: Mental illness funding

“The most significant effort the Congress of the United States…has ever undertaken”

This folder contains a press copy of President John F. Kennedy’s statement in the White House Cabinet Room upon signing S. 1576, the Community Mental Health Act of 1963 (also known as the Mental Retardation and Community Mental Health Centers Construction Act of 1963), an act to provide federal funding for community mental health centers and research facilities devoted to research in and treatment of mental retardation. He also announces the creation of the Department of Education Division of Handicapped Children and Youth.

A brief examination of the consequences of deinstitutionalization

By Stephanie Ramage

It is casually acknowledged in the United States that many of the homeless are mentally ill. There is also some understanding that the mentally ill became homeless because of government policies that closed mental health facilities in the 1960s, 1970s, 1980s, and 1990s. What is less understood is which policies were adopted as a result of deinstitutionalization, and how they came to be policies, and what was the reasoning behind those policies. It’s misguided to attribute the presence of the mentally ill on our streets today to milestone court cases, like the U.S. Supreme Court decision in Olmstead v. L.C. in 1999, which said patients who could be moved to community care mental health programs should be moved to them rather than remaining in institutions, or to legislation like the Omnibus Budget Reconciliation Bill of 1981, which cut federal spending on mental health programs by about 20 percent. But, in fact, deinstitutionalization was a 40-year movement that originated among psychiatric care providers who believed that tremendous progress in the development of pharmaceuticals designed to control the symptoms of mental illness would enable many of even the most seriously mentally ill to live “normal” lives in the community—either with family members, alone or in group homes—contributing positively to their own lives and the lives of those around them. As the drugs became easier and safer to use, managed care providers began approving their use in non-institutional settings. They represented a cost-savings for providers and seemed a godsend to those whose friends and family members had suffered isolation and ill-treatment in institutions. [1]

To understand why and how the government embraced the idea of deinstitutionalization in the face of pharmaceutical breakthroughs, it’s important to note that the history of mental institutions in the U.S. is a local and state history, not a federal history. Cities and states developed their own facilities for caring for the mentally ill. The first hospital built to treat both the physically and mentally ill was opened in Philadelphia in 1752, a full 25 years before independence from England. It was funded by the colonial assembly.  The first hospital built to house and treat the mentally ill exclusively was funded by Virginia’s colonial legislature and opened in 1773. And so the trend continued even after the American Revolution, with cities, counties and states raising taxes for building and operating mental institutions.[2] Over the first century-and-a-half of America’s independence many of them would become understaffed and ill-equipped as they took on the responsibility of the indigent mentally ill and their budgets proved inadequate to the task. Still, there seemed no better alternative. The drugs that would help make mental illness more manageable wouldn’t be discovered for another century.

By 1955, there were more than 559,000 people in state operated facilities.[3]

About 40 years later, when the U.S. Senate Finance Committee convened a hearing on deinstitutionalization, mental illness and medication as part of Congress’ deliberations on a national health care plan, that number had shrunk to about 85,000 according to Richard C. Surles, commissioner of mental health for the state of New York, who gave testimony to the committee.[4] The dramatic decrease had been made possible, at least in part, by the Mental Retardation Facilities and Community Mental Health Centers Construction Act of 1963, which was signed into law by President John F. Kennedy.

In that Senate Finance Committee hearing in 1994, Sen. Daniel P. Moynihan (D-NY), who had been present when Kennedy signed the law and who served as chair of the finance committee, explained what he believed had happened in response to the widespread support for transitioning patients out of the state institutions: “President Kennedy’s bill specifically provided that we [the federal government] would build 2,000 community mental health centers by the year 1980, and thereafter build one per 100,000 population and keep it at that rate. But we built about 400 and then forgot we had set out to do this. The institutional memory got lost in Congress, and in the Department of Health, Education and Welfare. Then we stopped, but the deinstitutionalization continued, or is more likely the case, people did not go into institutions. Then a generation went by and, low and behold, we now have a problem called ‘the homeless,’ which in my state, at least, is defined as a problem which arises from the lack of affordable housing. It does nothing of the kind. It arises from a decision based on research to follow a particular strategy with respect to a particular illness, which I think we now know has a fairly steady incident in any large population anywhere. The species has this problem.”[5]

Without Kennedy’s planned 2,000 community health centers, the states and the federal government were forced to redefine their relationship. Before deinstitutionalization, the states’ budgets provided 96 percent of funding for the care and housing of the seriously mentally ill—after all, they had been in state owned and operated facilities. However, with deinstitutionalization the federal government began picking up more than 50 percent of the tab for care through what E. Fuller Torrey, a clinical and research psychiatrist at one of the nation’s few federally-run hospitals, St. Elizabeth’s in Washington D.C., has described as a “disordered funding system,” a mish-mash of Social Security, Medicaid, Medicare, SSDI, food stamps and HUD subsidized housing.

“This has created a gigantic fiscal carrot,” Torrey told the committee. “Providing a huge incentive for the States to empty out their state mental hospitals and providing virtually no incentive for the States to then follow these people once they leave the hospital.”[6]

States were left scrambling to find accommodations for their former charges. Some, like New York, according to Commissioner Surles, put them up in single room occupancy hotel rooms.

“At one point in the 1970s, we had over 100,000 single-room occupancy hotels in New York City alone. A third of those beds were occupied by people who had a severe mental illness,” Surles told the committee.[7]

Little changed over time. In the late 1990s, years after the Senate Finance committee tried to figure out how to fund treatment of mental illness under the Clinton Administration’s proposed national health care plan, a registered nurse researcher at DePaul University conducted a study of the homeless mentally ill, tracking 60 people from their discharge from a state mental hospital through the course of two years in community mental health. The study found that SROs (single room occupancy) hotels were the most prevalent housing available, though gentrification threatened even that. Nonetheless, the accommodations were far from ideal. The rooms were small, sparsely furnished and not usually clean—the last often as a result of the former patients’ inability to either understand or execute basic cleaning.

“How often there was hot water, how clean the facilities were, how many vermin were present, and how rowdy or dangerous the neighbors were depended on the price of the room and the client’s ability to maintain a standard of behavior acceptable to the management…,” the study’s author noted. “Trash, partially eaten food, and dirty laundry were strewn throughout the rooms, leaving little floor space for walking. The clients seemed oblivious to their housekeeping lapses, unless threatened with eviction.”

Evictions were also a part of their lives. The DePaul University study noted that the newly-transitioned mentally ill would accumulate 4.6 moves per individual per year, with an average of 2.6 months in each placement. [8]

Poverty and inability to manage daily tasks like housekeeping and laundry would emerge in yet another study in 2010, this one conducted by patients themselves with help from a professor in Yale University School of Medicine’s Psychiatry Department. Eight patients interviewed 80 other patients who were affiliated with Yale’s Program for Recovery and Community Health and the North Central Regional Mental Health Board of Connecticut. Patients told their interviewers of experiences of homelessness, including being robbed and beaten, isolation in the community, and (in the case of at least one non-homeless patient) a sense of accomplishment from learning how to do simple tasks. Many of the patients highlighted by the study referred to being overwhelmed with basic day-to-day chores and having no one responsible to whom they could turn for guidance.

Larry Davidson, a doctor in the department, noted “While the last patient we quoted may be doing his laundry by himself now, this leg of the journey comes after many years of having to rely on others to do things for him first, and then to show him how to do things for himself.”[9]

In commentary on the 2010 journal article that published the findings of the user-led research in Connecticut, E. Fuller Torrey, the same practitioner who had provided testimony to Sen. Moynihan’s finance committee, concluded: “The data summarized by Davidson and colleagues suggest that Connecticut, as one of the most highly rated states for mental illness services, is indeed merely one of the smartest kids in the class for dumb children. For half a century in the United States, we have been very effective in emptying our state psychiatric hospitals and very ineffective in providing the services needed by the discharged patients to live in the community.”[10]





[1] Richard G. Frank and Sherry A. Glied, Better But Not Well: Mental Health Policy in the United States Since 1950 (Baltimore: Johns Hopkins University Press, 2006) Digital Location 279

[2] Gerald Grob, Mental Institutions in America: Social Policy to 1875 (New York: The Free Press, 1973), p.16-26

[3] United States Senate. 1994. “Deinstitutionalization, Mental Illness and Medications.” Hearing before the Finance Committee. 103rd Congress. Second Session. May 10, 1994. Washington D.C.: GPO

[4] U.S. Senate, Finance Committee, May 10, 1994. Surles p. 13

[5] U.S. Senate Finance Committee, May 10, 1994. Chairman Moynihan. p. 2-3

[6] Ibid. Torrey, p. 20

[7] Ibid. Surles, p. 14

[8] Lin J. Drury, “Community Care for People who are Homeless and Mentally Ill,” Journal of Health Care for the Poor and Underserved; May 2003; 14 (2) p. 198

[9] Larry Davidson et al, “’I Don’t Know How To Find My Way in the World,’: Contributions of User-Led Research to Transforming Mental Health Practice,” Psychiatry 73(2) Summer 2010.

[10] Ibid. E. Fuller Torrey