The welfare state is a concept of government in which state play a key role in the promotion and protection of economic and social well-being of people. It is based on the principles of equitable distribution of wealth, social responsibility, and equality of opportunity. The general term may cover many forms of social and economic organization.
A fundamental characteristic of the welfare state is social insurance. Such insurance is financed by compulsory contribution and is meant to provide benefits to families and persons during times of greatest need. In practice, however, the cash benefits fall short of the levels anticipated by the designers of the strategies.
The welfare state also includes the provision of health services, basic education, and housing. In these respects, the concept is more extensive in the western European nations than in the U.S, featuring in many cases provision of state-subsidized education and comprehensive health coverage.
The main problems in administering welfare state include determining the needed levels of service provision by state, equitable provision of resources to fund the services, ensuring efficiency in the operation of bureaucracies and state monopolies, and ensuring contribution meets the needs of families and individuals while at the same time providing enough incentive for productive work.