The Community Mental Health Act of 1963 (CMHA) (also known as the Community Mental Health Centers Construction Act, Mental Retardation Facilities and Construction Act, Public Law 88-164, or the Mental Retardation and Community Mental Health Centers Construction Act of 1963) was an act to provide federal funding for community mental health centers and research facilities in the United States. This legislation was passed as part of John F. Kennedy's New Frontier. It led to considerable deinstitutionalization.
In 1955, Congress passed the Mental Health Study Act, leading to the establishment of the Joint Commission on Mental Illness and Mental Health. That Commission issued a report in 1961, which would become the basis of the 1963 Act.
The CMHA provided grants to states for the establishment of local mental health centers, under the overview of the National Institute of Mental Health. The NIH also conducted a study involving adequacy in mental health issues. The purpose of the CMHA was to build mental health centers to provide for community-based care, as an alternative to institutionalization. At the centers, patients could be treated while working and living at home.
Only half of the proposed centers were ever built; none were fully funded, and the act didn’t provide money to operate them long-term. Some states saw an opportunity to close expensive state hospitals without spending some of the money on community-based care. Deinstitutionalization accelerated after the adoption of Medicaid in 1965. During the Reagan administration, the remaining funding for the act was converted into a mental-health block grant for states. Since the CMHA was enacted, 90 percent of beds have been cut at state hospitals.
The CMHA proved to be a mixed success. Many patients, formerly warehoused in institutions, were released into the community. However, not all communities had the facilities or expertise to deal with them. In many cases, patients wound up in adult homes or with their families, or homeless in large cities, but without the mental health care they needed.
This summary is from Wikipedia.