I think all these are great! When I think of insane asylum, I also think about lots of pills. So maybe a cake with a prescription bottle spilling out lots of sugar pills or candies that look like pills on top & spilling over the side. Maybe individual cupcakes with little pills on top too, like they'll be served to the patients. Maybe a sheetcake with a top that looks like a prescription form from a doctor. Or cupcakes with little individual straight jackets on them - cover shredded wheat cereal pieces in white chocolate melts & fondant, maybe?
Or make cupcakes with bloody (red icing) inscriptions like medical diagnosis - you'd have to have the right guest group for this if it's too un-politically correct, but "crazy", "insane", "hears voices", "psycho", etc. Then they could choose their issues! LOL!