Deinstitutionalization is the predominant public mental health policy in most states. An analysis of this policy in one state from a political-economic perspective gives support to the hypothesis that deinstitutionalization results in a two-class system of mental health care based upon the client's ability to pay. Inequalities exist in opportunities for care that are appropriate for the pathology suffered by the chronically mentally ill, and patients' basic needs are often unmet. Corporate actors involved in developing mental health policy overpower clients as well as nurses in the distributive process. The impact of this policy on quality of care and nursing is significant.