There are some destinations where a careful travelers would be very wary about using local hospitals. Abysmal hospital conditions that use unclean tools, expired medicine and even dirty needles are common throughout much of the developing world. While clean facilities may exist in major cities, they still may not have the advanced care needed for dire emergencies involving serious complications. If you find yourself in a serious medical emergency in one of these places, you'll want to arrange emergency medical evacuation to the closest city with world-class health care, which can cost tens of thousands of dollars.
Many hospitals abroad are very expensive to use and won't be covered by most employer-issued insurance. While it is true that most developed countries have socialized health care systems that are free for locals to use, they aren't necessarily free for foreign nationals to use. Some countries have reciprocity agreements to allow their respective citizens use each other's state health care systems, but this obviously doesn't apply to Americans travelers (who have no state health care system in the first place).
In order to qualify for student or work visas abroad, many countries demand that applicants have health insurance before issuance of a visa. Make sure to inquire at your local embassy when you apply for your visa.
Even if your regular health insurance does cover hospital expenses occurred in foreign countries, it is quite possible that it won't cover repatriation expenses. Most travel insurance companies will cover your medical bill and also pay for a plane ticket to fly you back home once you've been discharged.
Some recreational activities, such as extreme sports and other outdoor activities, might be off-limits if you don't have insurance. If you're spending a holiday in Cancun and suddenly decide you want to give scuba-diving a try, you might be out of luck if you don't have insurance coverage.
In many cases, regular employer-provided health insurance in the United States becomes void once the client leaves the country. Without buying travel health insurance beforehand, you might find yourself facing huge medical bills on trips abroad. Most travel insurance policies cover customers for an annual premium. In addition to covering medical costs, many policies will also cover non-medical emergencies such as flight cancellations, theft, and emergency repatriation.