Provision of basic health service is one of the primary goal of social andrneconomic development in the region. dibate woreda, as part of thernregion, is not an exception to this general truthrnBased on the above general truth, this study analyzed the effect of healthrnservice on the rural economic development III dibate woreda. bothrneconomic and social factors were considered III making the study. Inrnanalyzing the study, econometric estimates were made to test the priorrn~Yroth esi s and to analyze the rroblem addressed by this study. and alsornsecondary data analysis was made to measure the economic burden ofrnthe dominate disease in the study area. the response given by thernrespondents in the woreda show that even if family planning service werernrendered satisfactorily, the average family size and the number of householdsrnget new born child in the past two years prior to this studyrnremains high. Health centers, clinics and health posts were found to bernused more than the private health facilities and traditional healers.rneducation, income and also demographic factors like sex, age, and familyrnsize were found to affect whether to seek medical care or not at the timernof illness. From the secondary data analysis the overall finding based onrnthe data show that the effect of poor health impose immense economicrncosts on individuals, households, and society at large by reducing laborrnavailability, productivity and annual income of peasants