Despite the fact of being the largest economy in Latin America, piped water service coverage and sewage collection is not universal in Brazil. The relationship between access to water/sanitation and health was the objective of many studies recently. The majority of the existing work focuses on the impact of access to water and sewage, not investigating the effects of water quality and treatment. Moreover, the existing literature usually focuses on infant mortality and life expectancy indicators. Although these measures are important, they may not capture all the relevant public costs associated with health and related to hospitalizations. This paper aims at filling this gap by identifying the effects of sanitation policies on children morbidity rates by certain diseases in Brazilian municipalities.