OBJECTIVES: To analyze the inpatient direct medical costs of pneumonia among regions, level of cities, and types of the hospitals. Difference of reimbursement rate between the Urban Employee Basic Medical Insurance (UEBMI) and Urban Resident Basic Medical Insurance (URBMI) plans were compared. METHODS: Systematic sampling was used to collect data on inpatients costs of pneumonia in 2009 in China. The database includes 2868 hospitals from 60 cities. Direct medical costs of inpatients with pneumonia and reimbursement rate between UEBMI and URBMI plans were analyzed. RESULTS: In 2009, pneumonia was the most frequent disease in children below 5 years old and 5th among people 6 to 65 years old in China. In total 210,421 hospitalization case, the average cost of inpatient pneumonia was 5,415 Yuan ($853) per patient, and the expense in capital cities, prefectural-level cities, and county-level cities were 16,375 Yuan ($2,579), 4,321 Yuan ($681), and 4,434 Yuan ($698), respectively. The average length of hospitalization was 14.6 days for patients covered with UEMBI, and 11.7 days for those covered with URMBI. Almost 67% of the direct medical costs were covered by two medical insurance systems, but differed by system as 73.35% for urban employees and 51.99% for urban residents. Patients below 5 years old paid 64.76% of the direct medical costs out of pocket, whereas people over 65 year old only paid 27.2% because they were shielded by two different systems. CONCLUSIONS: In China, pneumonia is a common disease that mainly affects children and elderly people. There was significant difference in direct medical costs and the length of hospitalization among different regions and medical insurance systems. Costs in big cities were much higher than smaller ones because of the unbalanced distribution and uneven economics situation. The reimbursement rate of URMBI was much lower than that of UEMBI.