After the introduction of the large-scale Rajiv Aarogyasri Scheme in undivided Andhra Pradesh during 2007, which was meant to protect poor families from catastrophic inpatient health expenses, no reliable data is available to assess out-of-pocket health payments in the state. The latest data available is from the last round of a health survey by the National Sample Survey Office in 2004-05. This study estimates the OOP health expenditure in Andhra Pradesh in 2012-13, and provides estimates for the year's from 2004-05 onwards. The paper points out that the need is to formulate a state health policy, which, among other things, targets a government health expenditure to total health expenditure ratio of 0.8.