It's certainly possible for a single consciousness to develop severe mental illness, and if that's what we are then I'd say we were already well down that road.
For the most part, mental health is highly subjective and relative. Psychiatric and psychological diagnosis are based on relativity to the average, or normal mental state of the masses.
So, if all consciousness is merged into one, how could we make any relative judgements?
So, if all consciousness is merged into one, how could we make any relative judgements?