Usually, mentally ill people are outpatients of medical facilities. However, if they're not a danger to themselves or society, it's difficult to make a case that they should be imprisoned against their will (which is what it would amount to if one institutionalised a person indefinitely).
I'm not saying I know what the answer should be, and this sits on legally and ethically tricky ground all over the world. The mentally ill have been treated pretty badly through history, and I'm not sure that benign neglect is the worst of these options but I do think there should be some formal system of checking on them (informally, there are any number of NGOs and religious groups who tend to keep tabs on the homeless, funding permitting).
I'm not saying I know what the answer should be, and this sits on legally and ethically tricky ground all over the world. The mentally ill have been treated pretty badly through history, and I'm not sure that benign neglect is the worst of these options but I do think there should be some formal system of checking on them (informally, there are any number of NGOs and religious groups who tend to keep tabs on the homeless, funding permitting).