First off, I appreciate that this may be an understandably sensitive topic for some, and I apologise if my language is insensitive at any point.
My understanding is that the advent of new psychiatric medications and the huge costs associated with running residential institutions holding people with mental health problems and developmental difficulties led to a political drive to close these institutions and care for the people previously held in them 'in the community'. As far as I can tell it seems to have progressed at varying rates in most 'Western' countries, with the majority of most large long-stay institutions being closed. Indeed now it seems to be a generally held consensus, both in general public discourse, politics and clinical thinking that it would not be appropriate for institutional 'care' of this sort to be the default option.
I'm interested whether, when deinstitutionalisation was nascent and moving forward, were there any significant movements arguing against it? Was it objected to on political, economic, social or clinical grounds? Were there ever any meaningful movements or groups advocating for 're-institutionalisation'?
Well, I can only speak about the state government of NJ, but after the shut down of institutions it was regarded as a massive mistake in hindsight. It was thought that by shutting down these facilities and providing various forms of support to the patients and their family/caregivers that the state would save a large amount of money and have better outcomes for the patients. Now, many years down the road, the state has come to the conclusion that the costs of providing support to the patients and their caregivers has greatly exceeded what it would've cost to keep the patients in the institutions, even if they had been improved and expanded. The outcomes for the patients has also not been good - while many patients did benefit from leaving the facilities and going under the care of their families, in many cases the families were not able to cope. The closure of the facilities also deprived many of the patients of any socialization outside their immediate family and there was considerable stigma against them. It was a poorly handled transition and many of the patients were returned to abusive families or people simply unable to keep up with caring for them.
There is little funding or political will (nationally) to change the situation, and the department of child and family services in particular has had trouble dealing with the ongoing fallout. Figuring out a way to fix the current system or create a new one is a major concern within the state government.
Edit: fixing stuff around