- People without full health care insurance are at risk of incurring enormous out-of-pocket expenses should they fall ill. These are what are meant by 'catastrophic'. Catastrophic insurance is a form of health care insurance specifically designed to protect against such eventualities (but not necessarily against lesser financial exposures). In the US, catastrophic health care insurance is usually associated with high deductibles. In low-income countries even small out-of-pocket payments can be catastrophic by crowding-out other essential consumption items such as food, housing and clothing.