Thankfully, care of the mentally ill has evolved from its more barbaric past. However, you can revive that past in a lighthearted way by adopting costumes inspired by insane asylums. Dress up individually or go as a thematically linked group. You can masquerade as an insane patient, nurse, doctor or some other variation on the lunatic theme.
The straitjacketed patient is a classic costume that recalls the days when patients actually were restrained with such clothing. Such jackets are commercially available in costume stores or online, or you can easily duplicate one by stitching together the cuffs of a plaint white shirt. Straitjackets should have some decorative straps and buckles for an authentic touch.
This is another version of the lunatic patient. Instead of wearing a white straitjacket, dress in an orange institutional jumpsuit with chains at the ankles and wrists, handcuffs, and a scary, embellished mask over the face.
Asylums needed crazed doctors to complement their lunatic patients. Wear operating scrubs or a long white lab coat, but riff on the familiar doctor theme by adopting some bizarre accessories, like "bloody" surgical implements or a goofy wig.
The 2009 suspense film was set in a fictional insane asylum in the 1950s. You can draw inspiration from the characters and aesthetic of this film by imitating some of its costumes and clothing. For example, don a mid-century-style suit, long trench coat and fedora to recreate the look of the detectives in the film, or dress in a dark, drab suit and tie to dress as the spooky doctors of Shutter Island.