Background: Chronic Disease-Related Catastrophic Health Spending is Frequent in Ethiopia, Affecting Between 27% and 64.2 % of households, depending on the chosen catastrophe threshold. CBHI has been in place in Ethiopia since 2011, with the purpose of enhancing financial access to health care services, but there is little evidence of how well it protects chronic patients financially.rnObjective: The objective of the study was to assess level of catastrophic expenditure and evaluate the effect of community-based health insurance on catastrophic health expenditure among patient attending chronic follow up departments in Asella referral hospital, Southeast Ethiopia.rnMethod: A health facility-based comparative cross-sectional study was conducted in Asella referral hospital from March 2022 to May 2022. Systematic random sampling was used to select 325 chronic patients. Data was collected by ODK collect app and then imported to STATA version 17 for analysis. Principal component analysis (PCA) has been used to construct a wealth index, and propensity score matching was used to identify the effect of community-based health insurance on catastrophic health expenditure. rnResult: The study enrolled a total of 325 chronic patients (157 CBHI members and 168 non-members). Indirect costs were the major source of health care costs for insured patients, whereas direct costs were for uninsured patients. The incidence of catastrophic health expenditure was found in 39% of the total sample, while it was found in 31% and 47% of insured and uninsured patients, respectively, when the 15% non-food threshold is employed. Overshoot and mean positive overshoot were 10% and 33% for CBHI members, respectively, and 18% and 39% for non-members. Community-based health insurance contributes to a 19% (t = -2.97) reduction in catastrophic health expenditure among chronic patients.rnConclusion: Chronic patients, particularly uninsured households, had a high incidence and intensity of catastrophic health expenditure. Community-based health insurance has a substantial effect on lowering chronic patients' catastrophic expenditures. As a result, the government and all concerned bodies must expand community-based health insurance to provide financial protection for people suffered from chronic conditions.