I do not believe Reagan had a hand in it, but rather a series of court decisions before and during his term. Prior to the mid 70's, people with problems were often made to "go away" by their families or the justice system. States maintained institutions to house mentally deficient and the morally perverted, with little or no due process. I believe such decisions have led to many of our social problems we face today, but due process is a good thing. Apology for my lack of HTML ability.
http://disabilityjustice.org/halderman-v-pennhurst-state-school-hospital/