The humane treatment of the mentally ill was a major civilizational advance. At a time when there were really no effective treatments for the major disabling mental illnesses (ie Schizophrenias and Bipolar Disorder), providing these patients asylum from the rigors of real life was better than Bedlam or locking Aunt Jane in the attic.
Today, our treatments for Bipolar Disorder (aka Manic-Depression) are pretty good. Our treatments for the group of Schizophrenias are not very good. We can often remove acute symptoms but can not help people function at a normal level. They are mis-wired.
Efforts to help the seriously-ill, in hospitals, hospices, was termed "Moral Treatment." The asylum approach was largely undone with the deinstitutionalization movement under JFK. Thus bag ladies.
Here's a summary: A New Moral Treatment - Humane institutionalization can help the mentally ill and protect society. He might be right. I am not sure.