To assess the potential impact of national “catastrophic” health insurance on the medical-care system, the frequency and clinical characteristics of high-cost patients were surveyed at 17 acute-care hospitals in the San Francisco Bay Area. The percentage of patients whose yearly hospital charges exceeded $4000 in 1976 ranged from 4 at a community hospital to 24 at a referral hospital. Hospital costs charged to these patients ranged from 20 to 68 per cent of total billings, with the highest percentages generally occurring at large referral hospitals. Forty-seven per cent of adult high-cost patients had chronic medical conditions, and only one in six suffered from an acute medical “catastrophe.” In addition, more than 13 per cent of high-cost patients died in the hospital. National catastrophic health insurance is likely to pay for much chronic illness and terminal care and divert resources toward acute-care hospitals. (N Engl J Med 300:1306–1309, 1979) LEGISLATIVE proposals for national health insurance range from comprehensive schemes to more limited proposals that would pay for only certain categories of health expenses. It is sometimes assumed that expenditures under a categoric program would be fairly easy to predict and that the healthcare system would not change fundamentally as a result of categoric funding. Comprehensive schemes are often criticized on the basis of their potential inflationary impact. In contrast, categoric programs are politically attractive since they have a much lower perceived price tag and can be directed to needy groups. Moreover, there is substantial precedent for enacting categoric programs. © 1979, Massachusetts Medical Society. All rights reserved.