According to what I see, the old Michigan state hospitals cost some $500,000/bed/year. Ideology says we can't "burden" the "JCs" with a bill like that. Tax the Proles more? Or, embrace the forced labor camp model?

It would have to be the former. These folks aren't capable of performing any kind of forced labor worth a darn.

Like I said, it's an incredibly complicated issue. But one major reason that blue states (like California) never considered going back to state-provided involuntary institutional treatment was because it was considered to not be in the interest of the person being committed. There has been considerable shift on that. While forced institutionalization is a massive deprivation of someone's liberties, there is a growing concern that the alternative is itself inhumane - and comes with a whole lot of other costs that are also quite expensive.

You very well might not see this in Michigan, with GOP control over at least one house of the Legislature. But you might start to see it in more reliably blue states (like California) at the state level, and in Red States willing to cooperate with federal funding for these institutions.