Congress passed the 1988 Medicare Catastrophic Coverage Act (MCCA) in an effort to provide seniors with protection from catastrophic medical costs. The MCCA marked a turning point in Medicare policy. It sought to expand Medicare by requiring the beneficiaries themselves to find the added benefits to the program through increased premiums and linking the size of the increase to beneficiary income. The MCCA was largely financed by middle and upper income beneficiaries. Enacted on July 1, 1988, the MCCA was repealed 17 months later on November 22, 1989, due to controversy and opposition from senior citizens concerned about its financing and lack of long-term care benefits. This thesis examines the fiscal and political environment that led to the genesis, evolution, passage, and repeal of the MCCA. The legislative process and the financing mechanisms of the MCCA are examined within a political context dominated by the need to reduce spending and balance the budget. Data was obtained from congressional documents, periodicals, journals, and Office of Management and Budget, Congressional Budget Office, and Health Care Financing Administration documentation. The MCCA failed because of strong opposition from senior citizens and lobby groups regarding its means-tested financing and lack of long-term care. The complexity of the MCCA caused public misunderstanding and permitted opposition groups to promote misinformation concerning the bill and the Medicare program.