In 1963 President John F. Kennedy signs the Community Mental Health Act to provide federal funding for the construction of community-based preventive care and treatment facilities. Between the Vietnam War and an economic crisis, the program was never adequately funded (this is the last bill JFK signs before his death)
In 1965, with the passage of Medicaid, states are incentivized to move patients out of state mental hospitals and into nursing homes and general hospitals because the program excludes coverage for people in “institutions for mental diseases.”
The California Legislature passes the Lanterman-Petris-Short Act in 1967, which makes involuntary hospitalization of mentally ill people vastly more difficult. One year after the law goes into effect, the number of mentally ill people in the criminal-justice system doubles.
President Jimmy Carter signs the Mental Health Systems Act in 1980, which aims to restructure the community mental-health-center program and improve services for people with chronic mental illness.
Under President Ronald Reagan in 1981, the Omnibus Budget Reconciliation Act repeals Carter’s community health legislation and establishes block grants for the states, ending the federal government’s role in providing services to the mentally ill. Federal mental-health spending decreases by 30 percent.