Health care can be expensive for the un-insured, often constituting a potential poverty trap. Urban India is particularly vulnerable to this possibility given the greater demand for health, absence of a structured health care system, overburdened public institutions, ubiquitous and unregulated private health care market and the generic paucity of public funds. Using nationally representative household level data at two time points, this paper computes the
degree and depth of impoverishment from out of pocket medical expenses, and its variation across states and select socio-economic characteristics. Roughly 6 percent of the urban population or about 18 million people were impoverished entirely due to out of pocket medical expenses in India. There were substantial inter-state variation in incidence of this burden and all but one states display an increase in the degree of impoverishment between 1995-96 and 2004. The depth of poverty also registered a threefold increase between the two periods. Urban Muslims, scheduled caste, casual labour and lower middle income households were easily the most vulnerable to the financial implications of ill-health.