Mental health care has become a larger part of the health care system in America as psychiatric care has moved from the institutional, inpatient model to the outpatient, community care model in the last fifty years. Managed care, coming from the state and community levels, arrived in the late 1970s as deregulation brought the closure of hundreds of mental hospitals and residential clinics. People who suffer significant mental illness are no longer warehoused out of society for years on end; instead they remain in society, live by themselves and go to work if they can.
The rise of psychotropic medications and antidepressants such as Prozac brought changes in mental health care as well. The combination of medications and short, focused psychotherapy replaced Freudian psychoanalysis as the method of treatment. Treatment programs became generic and aimed at helping the greater number of patients, and this mainstreamed the mental health care paradigm further. As republican governments continued to turn over sections of the health care industry over to state agencies, state governments and communities scrambled to keep up with the flow of patients needing mental health care.
This often left many people in need out of the picture, suddenly placed on the streets with a handful of dollars and a bus pass, without the coping mechanisms necessary to make it on their own, which in turn led many into crime to obtain essentials and then into the criminal justice system instead of the health care system. Massive deinstitutionalization in the 1970s and 1980s, well before communities had organized reasonable community services, contributed to neglect of people with mental illnesses and homelessness. Gaps in mental health services continue.
The move to neurosciences inexorably pulled the focus onto keeping people in society and adhering to treatment plans, which included taking daily medications. Unfortunately this exposed the problem of how to provide care for people without health insurance, as Medicaid became the largest provider of mental health services for low-income people, not all of whom qualify for Medicaid coverage. With states shifting an increasing proportion of their mental health budgets onto Medicaid, fewer state funds are available to provide services for low-income, uninsured people with serious mental illnesses who are not eligible for Medicaid.