How can social institutions complicate and worsen vulnerabilities of particular individuals or groups? We begin by explicating how certain diagnoses within mental health and medicine operate as interactive kinds of labels and how such labels can create institutional barriers that hinder one's capacity to achieve well-being. Interactive-kind modeling is a conceptual tool that elucidates the ways in which labeling can signal to others how the labeled person ought to be treated, how such labeling comes about and is perceived, and how it compounds vulnerabilities. We argue that this shift in standpoint helps us recognize and mitigate compounded vulnerabilities.