OBJECTIVES: To understand hospitalization costs, expenses covered by insurance and disease distribution among urban inpatients with basic health insurance (BHI) in China between 2009 and 2010, providing data evidence for the government further improving BHI policies and drug regulation system. METHODS: A nationwide, cross-sectional sampling of urban inpatients with BHI was conducted in mainland China. A retrospective analysis was adopted and all results were extrapolated to the whole country according to the population, economics and other factors in the inpatients’ cities. The statistics analysis software was SQL Server 2003. RESULTS: There were 31,460,000 cases after extrapolated (sample=236,366) in 2010, with an increase of 13.92% than that of the previous year. Second-class hospitals received more hospitalization cases (45.47% of the total ) in 2010 than the previous year (41.28% of the total). Average hospitalization cost per visit in 2010 was 8056 RMB, an increase of 5.05% from the previous year. Remarkably, medication expenses accounted for about 49%, which was approximately equal to the previous year. The expenses covered by BHI accounted for 67.73% for each vist, which was higher than that of the previous year. Cerebrovascular disease had the most hospitalization cases (9.95% of the total), followed by cancer, ischemic heart disease, Hypertension and chronic lower respiratory diseases. The total hospitalization cost of cancer (36.403 billion RMB) was the highest, followed by cerebrovascular disease (25.242 billion RMB) and ischemic heart disease (20.472 billion RMB). CONCLUSIONS: The average hospitalization costs per visit and total hospitalization costs all increased. And rational drug use should be still paid more attention since the drug costs percentage was steadily high. Helping inpatients select proper hospitals to see doctors and strengthening the administration of diseases cost highly will be helpful for reducing the medical costs.