As a mental health nurse, no, it's not over diagnosed, however, it's how people cope and what people expect which is frustrating.
Lots of service bashing here, but so many people expect services to fix them without actually doing any work themselves. If you broke your leg, you'd see a doctor but you'd also do your physio at home. People come to psychiatry and expect medication to fix everything without changing the underlying reasons behind their illness, or expect immediate access to therapy without putting in any of the groundwork themselves.
Illnesses like BPAD and Schizophrenia can be blooming hard work. Hard for the person, hard for their families, hard for services to manage effectively and when it goes wrong, it goes wrong (see Calocane) so when budgets are tight, as they are as mental health has never been properly funded, we have to be able to focus services in these areas rather than the worried well, except the worried well make the most noise about needing help, so chronically ill, psychotic patients, go unnoticed and the lack of funding for these patients, and the service as a whole, continues.
Plus, serious mental illness is very difficult to 'fake' ; I've been a nurse for a long time, I could probably just about manage it but Joe Public couldn't!