Earlier quoted context omitted.
Obiously they should. The article hints at the sad reason they aren't: "...economical, not compassionate, reasons...". It's just cheaper to lock them up.
Housing even non-solitary confinement prisoners is pretty expensive though. Average cost is about $30K a year per prisoner in the United States ( http://www.nytimes.com/2013/08/24/nyregion/citys-annual-cost... ). Some areas of course are way more expensive: In NYC, it's $168K per prisoner per year apparently. I think part of the issue here is that, in the past, mental health institutions itself had their own huge iss…
There was a new generation of drugs people thought would end the need for institutions. I don't think they even considered the possibility people with mental illnesses would, in a state of mental soundness, decide not to take the drugs necessary to keep them there.
There was also a bit too much optimism when it came to assessing the effectiveness of the drugs.