This article analyzes the relationship between a needs-based decision system and universalism in the policy formation process of the Social Help Act (Bitandsloven). The Danish welfare system is still a universal welfare system; the idea of universalism is embedded in its historical institutional changes. Among the historical changes to the welfare system, the introduction of the Social Help Act in 1976 was especially important to its universalism. This law integrated the previous seven welfare laws, introduced benefit levels based on needs-testing, integrated offices, and increased municipal discretion. However, this policy formation process and its effects were complex because the idea of universalism poses the problem of how a government can capture needs and which levels of needs are appropriate for receiving assistance. The increasing discretion of municipalities in deciding the needs of each client has led to them carrying out needs-capturing, but the burden on social workers has increased. In other words, there has been tension between the state government and local governments regarding needs-testing. This means that the relationship between universalization and big government, which generates much tax revenue, is not independent, but that the change in fiscal situation has led to a change in how the universalistic welfare system recognized by policymakers.