Consiver these thoughts from Madison on State vs. Federal power....

Madison wrote in Federalist 45....

Those which are to remain in the State governments are numerous and indefinite. The former will be exercised principally on external objects, as war, peace, negotiation, and foreign commerce; with which last the power of taxation will, for the most part, be connected. The powers reserved to the several States will extend to all the objects which, in the ordinary course of affairs, concern the lives, liberties, and properties of the people, and the internal order, improvement, and prosperity of the State.

When Madison wrote this and Americans were forming their government of limited powers, the framers considered a substantive important role for the Federal government and this was to deal with principally these things; National defense, national diplomacy, system of national law and ensuring that the States do not restrict commerce between states. The balance of powers are in the portfolio of States rights and responsibilities including the 'improvement and prosperity' and this allows for states to theorectically provide such benfits if they choose to do so as healthcare, pensions and the like. The benefit of this model is that the nation will have a broad range of taxes and benefits, some of which will be a sucess and some of which will be complete failures. It will create a market if ideas and people will have the ability to leave a State that does not perform well.

I have subsequently added a system of money to these 4 powers since the ability to transact using a common currency is one that is fundamentally economically efficient and enables free interstate commerce.