We seem to have come full circle. One of the big reasons for the enormous homeless population, is because all the mental hospitals were closed, in the 1980s and 90s.
I think that news stories about [very real] abuses in these hospitals, along with the cost to maintain, were responsible.
You can yell "Get a job!" at schizophrenics, all you want, but it won't make them employable, or even able to live on their own.
There are a number of mental illnesses that can be treated, and recovery is possible, but that only accounts for a fairly small percentage of the severely mentally ill. I know a large number of folks that have done it, but for every one of them, there's a hundred more, that couldn't get it.
It's just that treating mental illness is hugely unpopular with the vast majority of folks that don't have any family or associates with mental illness, and even more unpopular with folks that have undiagnosed mental illness (It's quite possible to have a long, productive life, with some forms of mental illness -it can even be helpful, in some careers).