If I recall, the end of institutionalization had more to do with economic reasons then libertarian ones. State run institutions are a huge load to shoulder, economically speaking. It all started in the early 80's... the federal government quit sending subsidies to state run mental facilities, which then closed. That's also the reason for the large increase in the numbers of chronically homeless in the 80's (not that there weren't homeless people in the 70s and earlier).

In any case, I'm all for background checks. If I remember correctly, the NRA offered to fund a national one for all jurisdictions in the country. The only stipulation they placed was that the information on purchases could not be used in future seizures, should the state laws on gun ownership change down the road. Unfortunately, because they wanted to reserve the right do just that, most state governments turned the NRA down.