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Mental hospitals are likely not the answer, as once you go into one, getting out is quite difficult. Plus, who defines what deems one "crazy" anyways. I think the best way to deal with mental illness is for there to ensure that mental health medications and counseling are covered by private insurance and/or state insurance programs, and this will ensure that people will have access to mental healthcare and also have a chance of recovering from their condition without being locked up in an institution for life. In many cases, when people have access to adequate mental healthcare outside of an institution, it is possible for those with even the most serious conditions to recover from their illness. In comparison, when one is institutionalized on a long term basis, it is nearly impossible for anyone to recover from their condition.
I actually used to suffer from issues that would likely be deemed "mental illness". While I largely stayed out of the system, I went to a few psychologists. The only diagnosis I got was depression. However, I actually experienced highly detailed auditory hallucinations for several months and even had full conversations with them. I was able to recover from this completely, but I doubt that this would have happened had I been hospitalized.
The disability application should be streamlined to ensure that people are not waitlisted that truly need it for mental or physical conditions. However, with the current administration, this is unlikely to happen. Instead, disability benefits will likely be repealed in entirety and/or there even could be programs aimed at ensuring that those with mental disabilities are unable to be employed..... possibly HIPPA will be repealed ensuring that the corporations will be able to see all records, including mental health records.