More than 10 million people residing in 13 districts of the state of Bihar are facing the acute problem of arsenic contamination in drinking water. The objective of this paper is to quantify arsenic in drinking water, and to understand the associated health problems, health costs and socio-economic issues in the region. In the study, a field test kit was used to test the arsenic concentration in drinking water collected from 276 households. It was revealed that 63% of the households' drinking water contained arsenic in the excess of 10 ppb, 19.6% had arsenic concentration between 100 and <300 ppb, and 5% of the water samples contained arsenic between 300 and 500 ppb. Also, incidences of illness were found to be more frequent among children and females than among males. Monthly household cost and monthly per capita costs for the affected households and for all the surveyed households were found to be US$33.8 and US$ 3.9, and US$11.6 and US$ 1.3, respectively. The excess concentration of arsenic in drinking water over prolonged periods is likely to cause primary, secondary and tertiary health effects, and is a serious cause of concern.