A second explanation is the deinstitutionalization of the violently mentally ill. A 2000 New York Times study of 100 rampage murderers found that 47 were mentally ill. In the Journal of the American Academy of Psychiatry Law (2008), Jason C. Matejkowski and his co-authors reported that 16% of state prisoners who had perpetrated murders were mentally ill.
In the mid-1960s, many of the killings would have been prevented because the severely mentally ill would have been confined and cared for in a state institution. But today, while government at most every level has bloated over the past half-century, mental-health treatment has been decimated. According to a study released in July by the Treatment Advocacy Center, the number of state hospital beds in America per capita has plummeted to 1850 levels, or 14.1 beds per 100,000 people.
Moreover, a 2011 paper by Steven P. Segal at the University of California, Berkeley, "Civil Commitment Law, Mental Health Services, and U.S. Homicide Rates," found that a third of the state-to-state variation in homicide rates was attributable to the strength or weakness of involuntary civil-commitment laws.
It's important to keep in mind that the vast majority of people with mental illness do not commit crimes or engage in violence. But the popular refrain that there's no link between mental illness and violence is simply wrong.