In many ways, I believe, Reagan meant it literally. While others have provided some excellent examples, I would like to provide a few more.
Take, for example, the case of American Indian Reservations. They were initially proposed as a sanctuary and way to prevent Am Inds and Am Settlers from coming into conflict. Sure, it wasn't nice to move them, but hey, we're giving them all this land out west. It'll be fantastic. I exaggerate, but not by much. The reality of the Am Ind Reservation system has been nothing short of a horrific tragedy. While they are "sovereign" nations, they have effectively been ghettoized and segregated. Even where tribes have done fairly well, poverty and substance abuse are higher than in comparable areas. That doesn't even touch on the actual horror of the relocation.
Additionally consider the current case of higher education. While there are many issues to choose from, I'll discuss two: Sexual Assault and College Loans.
College loans were initially proposed as a way to help enable the poor and middle class to access college educations to improve their economic stations. It kinda worked in the beginning. College attendance rates did improve as did graduation rates. However, there was a huge issue. This was that now that "free" money was suddenly available, tuition and fees skyrocketed well beyond inflation. This resulted in a popular tactic in the 80's of completing schooling, particularly for things like MD's and lawyers then declaring bankruptcy to discharge the loans. This acted as somewhat of a check to the increase in tuition. However, when Congress changed the laws to make it nearly impossible to have student loans discharged. Tuition rates resumed an accelerated increase. Now we have an entire generation of people with tremendous debt and few opportunities.
On the topic of sexual assault in higher education, let's first agree that sexual assault is both horrible and criminal. As such, it should be prosecuted by the police and judicial system. Schools have no business prosecuting or investigating these matters, once charges are leveled, the police should be called. However, when the Obama administration issues a letter regarding the need for more action under Title IX to prevent/punish sexual assault, the result was something that would be more familiar in the USSR or East Germany than in America. Both young men and young women were accused of heinous crimes, expelled, publicly smeared with titles like rapist without anything that we would recognize as due process. We know that this was/is common, because the volume of law suites from from the people whose lives were destroyed by power maddened school officials is increasing and almost universally being decided in favor of the students, not the schools. This is beginning to change with the combination of law suites and new direction from the Dept of Ed.