We need to bring institutions back for those we cannot cure. Jail has become the treatment center of last resort for those too dangerous to themselves or others, because we closed all the secure psychiatric centers. There's not enough room in jail either, and judges aren't keen on incarcerating people long term to protect them from themselves. So these people end up on the street.
Besides the drug addicts, of which treatment is also a problem in the US, this is why you see so many crazy homeless people.
Institutions might not be a "nice" place to live your life, but it's a hell of a lot better than living on the streets