Washington, D. C. 20549

                             Form 10-K


[X] Annual report pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934  for  the  fiscal  year ended December 31,
    1996; or

[ ] Transition report  pursuant  to  Section  13  or  15(d)  of the
    Securities Exchange Act of 1934


Commission file number: 0-12024
                        -------

                    MAXICARE HEALTH PLANS, INC.
      ------------------------------------------------------
      (Exact name of registrant as specified in its charter)


          Delaware                               95-3615709
-------------------------------             -------------------
(State or other jurisdiction of               (I.R.S. Employer
incorporation or organization)              Identification No.)


1149 South Broadway Street, Los Angeles, California     90015
---------------------------------------------------------------
(Address of principal executive offices)             (Zip Code)


Registrant's telephone number, including area code: (213) 765-2000
                                                    --------------

      Securities registered pursuant to Section 12(b) of the Act:


                                         Name of each exchange
          Title of each class             on which registered
          -------------------            ---------------------
                None                             None


      Securities registered pursuant to Section 12(g) of the Act:


                  Common Stock, $.01 par value
                  ----------------------------
                        (Title of Class)

                  Exhibit Index page 94 of 193
                           1 of 193

<PAGE>

    Indicate by check mark whether the Registrant (1) has filed all
reports required  to  be  filed  by  Section  13  or  15(d)  of the
Securities Exchange Act of 1934  during the preceding 12 months (or
for such shorter period  that  the  registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.


                        YES   X    NO
                            -----     -----


    Indicate by  check  mark  if  disclosure  of  delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained,  to  the  best of Registrant's knowledge, in
definitive  proxy   or   information   statements  incorporated  by
reference in Part III of  this  Form  10-K or any amendment to this
Form 10-K.

                              X
                            -----


    The aggregate market value  of  the  voting  stock held by non-
affiliates of the registrant as of March 25, 1997:


      Common Stock, $.01 par value - $441,525,972


    The number  of  shares  outstanding  of  each  of  the issuer's
classes of capital stock, as of March 25, 1997:


      Common Stock, $.01 par value - 17,931,150 shares


    As of March 25, 1997,  Registrant  had 616,406 shares of Common
Stock being held by  the  Registrant,  as  disbursing agent for the
benefit of  holders  of  allowed  claims  and  interests  under the
Registrant's Joint Plan of Reorganization.


                  DOCUMENTS INCORPORATED BY REFERENCE

                              None.

                           2 of 193

<PAGE>

                              PART I
                              ------

Item 1. Business
        --------

General
-------

Maxicare Health Plans, Inc.,  a  Delaware corporation ("MHP"), is a
holding company which owns  various  subsidiaries, primarily in the
field of managed health care.  MHP and subsidiaries (the "Company")
have a combined enrollment of  approximately 423,000 as of December
31, 1996,  representing  an  increase  in  enrollment  of  23% from
December 31, 1995.  MHP owns  and operates a system of seven health
maintenance   organizations   ("HMOs")   in   California,  Indiana,
Illinois, Louisiana, North Carolina,  South Carolina, and Wisconsin
and  additionally  operates  Maxicare  Life  and  Health  Insurance
Company  ("MLH")  and  HealthAmerica  Corporation.    Through these
subsidiaries, the  Company  offers  an  array  of  employee benefit
packages,  including  group  HMO,  preferred  provider organization
("PPO"), point of service ("POS"), Medicaid and Medicare HMO, group
life   and   accidental    death   and   dismemberment   insurance,
administrative services  only  programs  and  wellness programs. In
addition,  the  Company  offers  a  number  of  pharmacy  programs,
including benefit design,  formulary  management, claims processing
and mail order services for employers and their employees.

Through its HMO operations the Company arranges for the delivery of
comprehensive  health  care   services   to   its   members  for  a
predetermined, prepaid fee.  The Company provides these services by
contracting on a  prospective  basis  with  physician  groups for a
fixed fee per member per month  regardless of the extent and nature
of services  provided  to  members,  and  with  hospitals and other
providers  under  a  variety  of  fee  arrangements.    The Company
believes that an  HMO  offers  certain  advantages over traditional
indemnity health insurance:

    -   To the member, an  HMO offers comprehensive and coordinated
        health  care   programs,   including  preventive  services,
        generally without requiring claims forms.

    -   To the employer, an  HMO  offers  an opportunity to improve
        the  breadth  and   quality   of  health  benefit  programs
        available  to  employees  and   their  families  without  a
        significant increase in cost or administrative burdens.

    -   To health  care  providers,  such  as  physician groups and
        hospitals,  an  HMO  provides  a  more  predictable revenue
        source.

The Company's executive offices are  located at 1149 South Broadway
Street, Los Angeles, California 90015,  and its telephone number is
(213) 765-2000.

                           3 of 193

<PAGE>

Company Operations
------------------

The Company's total membership has grown from approximately 345,000
members at December 31,  1995  to  approximately 423,000 members at
December 31, 1996.  The  Company's  membership at December 31, 1996
is as follows:


                                  Governmental
                  Commercial (Medicaid & Medicare)  Total      %
                  ---------- --------------------- -------  ------
California         153,600          27,200         180,800   42.8%
Indiana            104,900          48,400         153,300   36.2
Other States        75,900          13,000          88,900   21.0
                   -------          ------         -------  -----
Total Membership   334,400          88,600         423,000  100.0%
                   =======          ======         =======  =====

Overview of Managed Health Care Services
----------------------------------------

HMO.  The Company owns  and  operates a multi-state system of HMOs.
An HMO is an organization that arranges for health care services to
its members.  For these services, the members' employers pay all or
most of a predetermined fee that  does  not vary with the nature or
extent of health  care  services  provided  to  the member, and the
member pays a relatively small copayment for certain services.  The
fixed payment distinguishes HMOs from conventional indemnity health
insurance plans  that  contain  customary  copayment and deductible
features and also require the  submission  of  claim forms.  An HMO
receives a fixed amount from  its  members regardless of the nature
and extent of health care  services  provided, and as a result, has
an incentive to keep its  members  healthy  and to manage its costs
through measures such as the  monitoring of hospital admissions and
the review of specialist referrals by primary care physicians.  The
HMO's goal is to  combine  the  delivery  of  and access to quality
health care services with effective management controls in order to
make the most cost-effective use of health care resources.

Although HMOs have been  operating  in  the  United States for over
half of a century, their  popularity  began increasing in the 1970s
in response to rapidly  escalating  health care costs and enactment
of the  Federal  Health  Maintenance  Organization  Act  of 1973, a
federal statute designed to promote the establishment and growth of
HMOs (see "Item 1. Business - Government Regulation").

The four  basic  organizational  models  utilized  by  HMOs are the
staff, group, independent practice  association and network models.
The distinguishing feature between models is the HMO's relationship
with its physicians.    In  the  staff  model,  the HMO employs the
physicians  directly  at  an   HMO  facility  and  compensates  the
physicians by salary  and  other  incentive  plans.    In the group
model, the HMO  contracts  with  a  multi-specialty physician group
which provides services primarily for HMO members and receives a

                           4 of 193

<PAGE>

fixed monthly  fee,  known  as  capitation,  for  each  HMO member,
regardless of the nature  and  amount  of  services provided to the
member.  Under the  independent practice association ("IPA") model,
the HMO either contracts  with  a physicians' association, which in
turn contracts directly  with  individual  physicians, or contracts
directly  with  individual  physicians.    In  either  case,  these
physicians provide care in  their  own  offices.  Under the network
model of organization,  the  HMO  contracts with numerous community
multi-specialty physician groups,  hospitals  and other health care
providers.  The physician groups  are paid primarily on a capitated
basis, as in the group model,  but medical care is usually provided
in the physician's  own  facilities.    The  Company's HMOs utilize
network, group and independent practice association models.

PPO.  PPO  products  include  certain  attributes  of managed care;
however,  a  PPO  is   similar  to  conventional  indemnity  health
insurance in  that  it  provides  a  member  with  the unrestricted
flexibility to choose a  physician  or  other health care provider.
In a PPO, the  member  is  encouraged,  through financial and other
incentives, to use participating  health  care providers which have
contracted with the PPO  to  provide  services at discounted rates.
In the event a member elects not to use a participating health care
provider, the member  may  be  required  to  pay  a  portion of the
provider's fees as in a conventional indemnity plan.  The Company's
PPO business began in Indiana in the fourth quarter of 1989 and has
expanded to  California,  Louisiana,  Illinois  and North Carolina.
The  PPO  line  of  business  comprised  approximately  2%  of  the
Company's total enrollment at December 31, 1996.

POS.  The Company  also  offers  a  POS  product which combines the
elements of an HMO  with  the  elements of a conventional indemnity
health insurance product.

Medicaid.  Medicaid is a state-operated program which utilizes both
state and  federal  funding  to  provide  health  care  services to
qualified low-income residents.  A Medicaid managed care initiative
developed by a state must  be  approved by the federal government's
Health Care Financing Administration  ("HCFA").  HCFA requires that
Medicaid managed care plans meet federal standards and cost no more
than the amount that would have been spent on a comparable fee-for-
service basis.    Under  the  contract  with  a  state, the Company
receives a  fixed  monthly  payment  for  which  it  is required to
provide  managed  health  care  services  to  a  member.   Medicaid
beneficiaries do not pay any premiums, deductibles or co-payments.

Effective January  1995,  the  Indiana  HMO  entered  into two year
contracts with the  state  of  Indiana  to  provide HMO services to
Medicaid  recipients  in  the  northern  and  southern  regions  of
Indiana.   These  contracts  were  renewed  for  the  1997 year and
provide for continuation of the contracts  for the 1998 year at the
election of the  state  of  Indiana.    Effective January 1997, the
Indiana HMO entered into  a  two  year  contract  with the state of
Indiana to  provide  HMO  services  to  Medicaid  recipients in the
central region  of  Indiana.    This  contract  provides for annual
continuation of the contract for the 1999 year and 2000 year at the

                           5 of 193

<PAGE>

election of the state  of  Indiana.    As  of December 31, 1996 the
Medicaid program  comprised  approximately  45,200  members  of the
Indiana HMO's total enrollment.    In December 1994, the California
HMO contracted with the state of California to provide HMO services
to Medicaid recipients in  Los  Angeles  County.  This contract was
renewed in July 1995 for a  one  year  term and in July 1996 for an
additional one year term.   In  1996  the state of California began
implementation of a new  managed  care  program which resulted in a
publicly - sponsored health  plan  being established in Los Angeles
County to serve the  Medicaid  population.   The California HMO has
contracted for a three year term with the publicly-sponsored health
plan, which in  turn  has  contracted  directly  with  the state of
California under this new Medicaid program, to provide HMO services
upon the operational effective date of  this new program.  This new
program has been designed in part  as a replacement to the existing
Medicaid managed care program in Los Angeles County and is expected
to become  operational  during  1997  at  which  point  in time the
California HMO's Medicaid  contract  with  the  state of California
will be discontinued.   Although  the  Company cannot be certain at
this point in  time  of  the  effects  from  implementation of this
program, it believes the Medicaid  membership of the California HMO
will increase in 1997  from  the current Medicaid membership level.
As  of   December   31,   1996   the   Medicaid  program  comprised
approximately  24,000  members   of   the  California  HMO's  total
enrollment.    The  North  Carolina  HMO  and  Wisconsin  HMO  have
contracted for one year terms with the states of North Carolina and
Wisconsin  to  provide  HMO  services  to  the  respective  state's
Medicaid recipients  since  1995  and  1984,  respectively.   As of
December 31, 1996,  the  Medicaid  programs comprised approximately
19% of the  Company's  total  enrollment,  an  increase of 62% from
December 31, 1995.

Medicare.  The  Company  has  entered  into federally sponsored one
year  Medicare  contracts  to  provide  HMO  services  to  Medicare
beneficiaries in California and  Indiana.    The programs, known as
MAX 65 Plus,  provide  Medicare  recipients  with  a choice between
standard Medicare coverage or MAX  65 Plus which has no deductibles
and  minimal  copayments.    The  MAX  65  Plus  programs comprised
approximately 2% of the  Company's  total enrollment as of December
31, 1996.

Specialty Managed Care and  Other  Insurance Services.  In addition
to its core HMO operations, the Company offers a range of specialty
managed care and other insurance  services.  The Company operates a
24 hour managed care program ("Max at Work") in conjunction with an
independent workers' compensation insurance carrier, which provides
HMO and  workers'  compensation  coverage  in  one  coordinated and
comprehensive  managed  care  system.    Under  this  program, both
occupational and nonoccupational injuries and health care needs are
covered by benefit  packages  administered  on a coordinated basis.
The Company also  offers  a  number  of pharmacy programs including
benefit design, formulary  management,  claims  processing and mail
order services for employers and their employees.  Through MLH, the
Company offers group  life  and  accidental death and dismemberment
insurance products.

                           6 of 193

<PAGE>

Health Care Services
--------------------

In exchange for a predetermined  monthly  payment, an HMO member is
entitled to receive a broad range of health care services.  Various
state and federal regulations require  an  HMO to offer its members
physician and hospital services, and permit an HMO to offer certain
supplemental services such  as  dental  care  and prescription drug
services at additional cost.

The Company's  members  generally  receive  the  following range of
health care services:

    Primary Care  Physician  Services  -  medical  care provided by
    primary  care   physicians   (typically  family  practitioners,
    general internists  and  pediatricians).    Such care generally
    includes periodic  physical  examinations,  well-baby  care and
    other preventive health services,  as  well as the treatment of
    illnesses not requiring referral to a specialist.

    Specialist  Physician  Services  -  medical  care  provided  by
    specialist physicians on referral  from the responsible primary
    care physicians.  The  most commonly used specialist physicians
    include obstetrician-gynecologists, cardiologists, surgeons and
    radiologists.

    Hospital Services  -  inpatient  and  outpatient  hospital care
    including room and  board,  diagnostic  tests,  and medical and
    surgical procedures.

    Diagnostic  Laboratory  Services  -  inpatient  and  outpatient
    laboratory tests.

    Diagnostic  and  Therapeutic  Radiology  Services  -  X-ray and
    nuclear  medicine  services,   including   CT  scans,  MRI  and
    therapeutic radiological procedures.

    Other  Health  Services  -   medical  and  surgical  procedures
    performed on  an  outpatient  basis,  including  emergency room
    services  where   such   services   are   medically  necessary,
    outpatient   surgical   procedures,   evaluation   and   crisis
    intervention,  mental  health  services,  physical  therapy and
    other  similar  services   in   which  hospitalization  is  not
    medically necessary or appropriate.

    Other Services -  other  related  health  care services such as
    ambulance, family planning and  infertility services and health
    education (including  prenatal  nutritional counseling, weight-
    loss and stop-smoking programs).

Additional optional services available  to  HMO members may include
inpatient psychiatric care, hearing  aids, durable medical supplies
and equipment,  dental  care,  vision  care,  chiropractic care and
prescription drug services.


                           7 of 193

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Delivery of Health Care Services
--------------------------------

The Company's HMOs arrange for the delivery of health care services
to their members by contracting with physicians, either directly or
through IPAs and medical  groups,  hospitals  and other health care
providers.  The Company's  HMOs  typically  pay to the physicians a
monthly capitation fee for each member assigned to the physician or
group.  The amount of  the  capitation  fee  does not vary with the
nature or  extent  of  services  utilized.    In  exchange  for the
capitation fee,  the  physicians  provide  professional services to
members, including laboratory services and X-rays.

Members select a primary care  physician to serve as their personal
physician from the contracting physician  or group.  This physician
will oversee their medical care and refer them to a specialist when
medically necessary.  In  order  to  attract new members and retain
existing members,  the  Company's  HMOs  must  retain  a network of
quality physicians  and  groups  and  develop  agreements  with new
physician groups.

The Company's  HMOs  contract  for  hospital  services with various
hospitals  under  a  variety  of  arrangements,  including fee-for-
service,  discounted  fee-for-service,  per  diem  and  capitation.
Hospitalization costs are not  generally included in the capitation
fee paid by the  Company's  HMOs  to  physician  groups.  Except in
emergency situations, a  member's  hospitalization must be approved
in advance by  the  utilization  review  committee  of the member's
physician group and must  take  place  in hospitals affiliated with
the Company's HMOs.    When  emergency situations requiring medical
care by physicians or  hospitals  not affiliated with the Company's
HMOs arise, the Company's  HMOs assume financial responsibility for
the cost of such care.

Quality Assurance
-----------------

As required by federal  and  state  law,  the Company evaluates the
quality and appropriateness of  the  medical  care delivered to its
members  by   its   independently   contracted   providers.    When
considering whether to contract with  a provider, the HMO evaluates
the  quality  of  the  physician  or  group's  medical  facilities,
professional  qualifications  and   the   capacity  to  accommodate
membership demands.  Among the means  used to gauge the quality and
appropriateness of care  are:  the  performance of periodic medical
care evaluation studies,  the  analysis  of  monthly utilization of
certain services, the  performance  of periodic member satisfaction
studies  and  the  review  and  response  to  member  and physician
grievances.

The  Company  compiles   a   variety   of  statistical  information
concerning the utilization of various services, including emergency
room care, outpatient care, out-of-area services, hospital services
and  physician  visits.     Under-utilization   as  well  as  over-
utilization is closely evaluated in an effort to monitor the

                           8 of 193

<PAGE>

quality of care provided to  the Company's members by participating
physicians and physician groups.

The Company's  HMOs  have  member  services  departments which deal
directly  with  members  concerning  their  health  care questions,
comments, concerns  or  grievances.    The  Company conducts annual
surveys among members concerning  their  level of satisfaction with
the services they receive.    Management  reviews any problems that
are raised by members concerning  the  delivery of medical care and
receives periodic reports summarizing member grievances.

The  National  Committee  for  Quality  Assurance  ("NCQA")  is  an
independent, non-profit  organization  that  reviews  and accredits
HMOs.  NCQA  performs  an  evaluation  of  an HMO's operations with
respect to standards established  for quality assurance, preventive
health  services,   utilization   management,  reporting,  members'
rights, as well as other factors.   Certain HMOs of the Company are
in the  process  of  seeking  NCQA  accreditation  while others are
preparing for NCQA accreditation.

Premium Structure and Cost Control
----------------------------------

The  Company  generally  sets  its  membership  fees,  or premiums,
pursuant to a community  rating  system,  thereby charging the same
nominal premium per class  of  subscriber  within a geographic area
for like services;  however,  groups  which meet certain enrollment
requirements are charged  premiums  based  on prior cost experience
(see "Item 1. Business - Government Regulation").

The Company manages health care costs primarily through contractual
arrangements with health  care  providers  which  share the risk of
certain health care costs.   The  Company's HMOs arrange for health
care services  primarily  through  capitation  arrangements.  Under
capitation contracts,  the  HMO  pays  the  IPA,  medical  group or
hospital a fixed amount per enrollee per month to cover the payment
of all or most medical  services regardless of utilization, thereby
transferring the risk of certain  health care costs to the provider
organization.  For the year  ended  December 31, 1996 physician and
hospital capitation represented 64% of total health care costs.

The focus for cost control and medical utilization in the Company's
HMOs is the primary  care  physician  or group who provide services
and control  utilization  of  services  by  directing  or approving
hospitalization and referrals  to  specialists and other providers.
In order to manage  costs  in  situations where the Company assumes
the financial responsibility for  specialist referrals and hospital
utilization, the Company  provides  additional incentives to health
care providers for appropriate utilization of these services.

In addition to directing the Company's health care providers toward
capitation arrangements, the Company has  a variety of programs and
procedures in place  to  encourage  appropriate utilization.  These
programs and procedures are intended  to address the utilization of
inpatient services, outpatient services and referral services

                           9 of 193

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which: (i) verify the  medical  necessity of inpatient nonemergency
treatment  or  surgery,   (ii)   establish   whether  services  are
appropriately performed in an inpatient setting or could be done on
an outpatient basis; and (iii)  determine the appropriate length of
stay for inpatient  services,  which  may involve concurrent and/or
retrospective review.  In addition,  the Company monitors the terms
and  procedures  of  its  pharmacy  plan,  incorporating  such cost
containment  features  as  drug  formularies  (a  Company-developed
listing of preferred, cost-effective drugs).

For further information, see  "Item  7. Management's Discussion and
Analysis of  Financial  Condition  and  Results  of Operations" and
"Item 8. Financial  Statements  and Supplementary Data-Consolidated
Statements of Operations" included herein.

Marketing
---------

The Company markets  to  employers  or  other groups through direct
selling efforts and  through  contacts  with  insurance brokers and
consultants.  Members typically join  the Company's HMOs through an
employer, who pays all or  most  of  the  monthly premium.  In most
instances, employers offer employees  a  choice of indemnity health
insurance coverage or coverage  with  PPOs  and  HMOs such as those
operated by the Company.  The Company's PPO and HMO agreements with
employers are generally for a  term of 12 months, and automatically
renew unless a termination  notice  is  given.   Once the Company's
relationship with the  employer  is  established, marketing efforts
are then focused on employees.    During an annual "open enrollment
period", employees may select  their  desired health care coverage.
The primary annual open  enrollment  period  occurs in the month of
January.    As  of  January  31,  1997,  approximately  63%  of the
Company's commercial members had selected their desired health care
coverage for the ensuing annual  period.   New employees make their
choices at  the  time  of  employment.    The  Company's commercial
membership is widely diverse, with no employer group comprising 10%
or more of the  Company's  total  enrollment.    As of December 31,
1996,  the  Company's  HMOs  were  offered  by  approximately 1,380
employer groups.

The Company has also developed  a multi-state account program which
offers employers having multiple  locations  in areas served by the
Company's HMOs the  opportunity  to  deal  with one primary account
manager.   Billing  and  enrollment  procedures  are  handled at an
individual  HMO  level,   giving   the   multi-state  employer  the
opportunity  to  monitor  individual  geographic  areas  among  its
employer  population.    For  certain  multi-state  employers,  the
Company develops  individual  marketing  and  benefit  programs for
separate divisions, locations  or  benefit  classes within the same
employer.

The Company believes that  attracting  employers  is only the first
step toward increasing enrollment at  each of its HMOs; ultimately,
the Company's ability to retain and increase membership will depend
upon how users of the health care system assess its benefit

                           10 of 193

<PAGE>

package,  rates,  quality  of   service,  financial  condition  and
responsiveness to user demands.

The Company markets its  Medicare  programs to employer groups with
retiree  groups  and   to   eligible   individuals  through  direct
solicitation and cooperative advertising with participating medical
groups.  The  Company  markets  its  Medicaid  programs pursuant to
guidelines  established  by  the  various  states.    Medicaid  and
Medicare beneficiaries may disenroll  for  any  reason upon 30 days
notice.

Management Information Systems
------------------------------

All of the Company's HMOs are currently linked through a network of
data lines to the  corporate  data  center, allowing the Company to
prepare  and  distribute  management,  accounting  and  health care
services  reports  (including   eligibility,  billing,  capitation,
claims information and  utilization  reports)  on an ongoing basis.
System generated reports contain  budgeted  and actual monthly cost
and utilization statistics relating to physician initiated services
and hospitalization.  Hospital  reports,  which  are available on a
daily basis, are  further  analyzed  by  the  type of service, days
paid, and actual and average  length  and  cost  of stay by type of
admission.  The corporate data center is located in Los Angeles.

Competition
-----------

Both the health  care  industry  as  a  whole  and the managed care
industry in particular are becoming increasingly competitive in all
markets.    The  HMO  industry  continues  to  gain  market  share,
particularly at the  expense  of  indemnity  carriers.  The Company
competes in its  regional  markets  for  employers and members with
other HMOs, indemnity health insurers and PPOs as well as employers
who elect to  self-insure,  and  for  quality physician groups with
other HMOs and PPOs.  Many  of these competitors are larger or have
greater  financial  resources  than  the  Company.    The  level of
competition varies from state to state depending on the variety and
relative market share of  indemnity  insurance,  HMO and PPO health
care services offered.    The  Company  also faces competition from
hospitals and other  health  care  providers  who have combined and
formed their own networks to contract directly with employer groups
and other prospective  customers  for  the  delivery of health care
services.  California,  the  largest  market  in  which the Company
operates, is served by a significant  number  of HMOs and is one of
the most heavily penetrated markets  by  HMOs in the United States.
Competition for members in the California market has resulted in an
increase in price competition.

The Company believes that the  principal competitive factors in the
managed health care industry are  health  care costs to members and
employers, the quality  and  accessibility of contracted providers,
the variety of health care coverage options offered and the quality
of service to members and providers.  Competition may result in

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pressure to  reduce  rates  or  place  limitations  upon the growth
potential  of  HMOs  in  any  particular  market.    Employers, for
example, are increasingly cost  sensitive  in selecting health care
coverage  for  their  employees,  providing  an  incentive  for the
Company to keep its rates  competitive.   In addition to the above,
the Company has  recently  faced  increased competition from health
care providers offering not only HMO services but PPO and indemnity
health care services as well.   In an effort to remain competitive,
the Company offers  a  variety  of  health care services, including
PPOs,  and  is  actively  exploring  offering  additional  PPO  and
indemnity services through joint ventures or other arrangements.

Competition may also be affected by mergers and acquisitions in the
managed care and general  health  care industries as companies seek
to expand their operating territories,  gain economies of scale and
increase market share.   The  California market, in particular, has
recently experienced a number  of  mergers  and acquisitions in the
managed care industry.  Many of the Company's principal competitors
have substantially larger membership or greater financial resources
than the Company.

Government Regulation
---------------------

The federal government and each of  the states in which the Company
conducts its business have adopted laws and regulations that govern
the business activities of  the  Company  to  varying degrees.  The
most important laws affecting  the  Company  are the Federal Health
Maintenance Organization Act of  1973,  as amended (the "HMO Act"),
and the  regulations  thereunder  promulgated  by  the Secretary of
Health  and  Human  Services,  and  the  various  state regulations
mandating compliance with  certain  net  worth  and other financial
tests.

All of the Company's  HMOs  are  federally  qualified under the HMO
Act.   The  HMO  Act  and  regulations  provide  that, with certain
exceptions, each employer of at  least 25 employees must permit two
"qualified" HMOs to market health  benefits plans to its employees,
with  the  employer  contributing   the   same  amount  toward  the
employee's HMO enrollment fee as  it  would otherwise have paid for
conventional  indemnity  health  care  insurance.    Under  federal
regulations, services to members  must be provided substantially on
a fixed prepaid monthly basis,  without  regard to the actual level
of utilization of services.   Premiums established by HMOs may vary
from  employer  to  employer  through  composite  rate  factors and
special treatment of  certain  broad  classes of members, including
geographical location ("community  rating").   Experience rating of
accounts (i.e., setting premiums for  a group account based on that
group's past use of health  care  services) is also permitted under
federal regulations in certain  circumstances.   From time to time,
modifications to the HMO Act  have been considered by Congress. The
Company is unable to predict what, if any, modifications to the HMO
Act  will  be  passed  into  law  or  what  effect,  if  any,  such
legislation  would  have  upon  the  operations,  profitability  or
business prospects of the Company.

                           12 of 193

<PAGE>

Among other areas regulated by  federal and state law, although not
necessarily by each state, are  the  scope of benefits available to
members, the manner  in  which  premiums are structured, procedures
for the review of  quality  assurance, enrollment requirements, the
relationship  between  the  HMO  and  its  health  care  providers,
procedures  for  resolving   grievances,  licensure,  expansion  of
service area, and financial  condition.    The  HMOs are subject to
periodic review and or  audit  by  the  federal and state licensing
authorities regulating them.

A number of jurisdictions in  which the Company's HMOs operate have
enacted small group  insurance  and  rating reforms which generally
limit the ability of insurers and  HMOs  to use risk selection as a
method of controlling costs for  small  group business.  These laws
may generally limit  or  eliminate  use  of pre-existing conditions
exclusions, experience rating  and  industry  class  rating and may
limit the amount of rate increases from year to year.

All  of  the  Company's  HMOs   are  licensed  by  pertinent  state
authorities and are  subject  to  extensive state regulations which
require periodic  financial  reports  and  compliance  with minimum
equity, capital, deposit  and/or  reserve  requirements.  These and
other requirements limit  the  ability  of  the HMO subsidiaries to
transfer funds to MHP.   The Company has implemented administrative
services  agreements  which  provide  for  MHP  to  furnish various
management,  financial,   legal,   computer  and  telecommunication
services to the HMOs pursuant  to  the  terms of the agreement with
each HMO.

MLH and certain of  the  Company's  HMOs  are subject to regulation
under state insurance holding  company regulations.  Such insurance
holding company laws and regulations generally require registration
with the state Department  of  Insurance  and the filing of certain
reports   describing   capital   structure,   ownership,  financial
condition, certain intercompany  transactions  and general business
activities.   Certain  state  insurance  holding  company  laws and
regulations require prior  regulatory  approval  of,  or in certain
circumstances, prior notice  of,  certain  transactions between the
regulated companies and their affiliates.

The Company's HMOs which  have  Medicare risk contracts are subject
to regulation by HCFA, a branch  of the United States Department of
Health and Human  Services.    HCFA  has  the  right  to audit HMOs
operating under  Medicare  risk  contracts  to determine compliance
with contract terms,  regulations  and  the  quality  of care being
rendered to the  HMO's  enrollees.    HCFA  also  has  the right to
terminate the Company's Medicare contracts  if the Company fails to
meet established compliance  standards.    The Company's HMOs which
have Medicaid  contracts  are  subject  to  both  federal and state
regulation regarding services to be provided to Medicaid enrollees,
payment for those  services  and  other  attributes of the Medicaid
program.

                           13 of 193

<PAGE>

All of the Company's HMOs have contracts with the Federal Employees
Health Benefit Plan  ("FEHBP").    These  contracts  are subject to
extensive  regulation  including  complex  rules  relating  to  the
premium  rates  charged.      The   FEHBP   has  the  authority  to
retroactively audit the premium  rates and seek adjustments thereto
in accordance with specified guidelines.

The Company believes  that  it  is  currently  in compliance in all
material respects with  the  various  federal and state regulations
and contractual requirements applicable to its current operations.

The issue of health care reform continues to undergo discussion and
examination within both the  public  and private sectors.  Although
the concept of managed care appears  to be an integral part of many
proposals, the Company cannot  determine  the effect, if any, these
proposals or other reforms, if enacted, may have on the business or
operations of the Company.


History
-------

The Company's HMO business  originated  in  California in 1973. The
Company began multi-state  operations  in  June  1982 by purchasing
100% of CNA Health Plans, Inc.   As part of its expansion strategy,
the Company  acquired  all  of  the  stock  of  HealthCare USA Inc.
("HealthCare") and  HealthAmerica  Corporation ("HealthAmerica") in
the fourth quarter of  1986.    At  that  time, HealthCare owned or
managed HMOs in  three  states  and  HealthAmerica owned or managed
HMOs in 17 states, including 11 states not previously served by the
Company.  As  a  result  of  these  acquisitions, which were highly
leveraged, and adverse industry conditions, the Company's financial
condition deteriorated significantly culminating  in MHP and forty-
seven affiliated entities filing for protection under Chapter 11 of
the United States Bankruptcy Code  (the "Bankruptcy Code") in March
and April of 1989.

Under  the   Bankruptcy   Code,   substantially   all  pre-petition
liabilities, contingencies and  other  contractual obligations were
discharged upon emergence from Chapter  11 on December 5, 1990, the
"Effective Date" of the plan of reorganization (the "Reorganization
Plan").

In addition to distributions of cash, Senior Notes and Common Stock
to holders of  allowed  claims  under  the Reorganization Plan, the
Company  was  required   to   make   distributions   based  on  its
consolidated net worth in  excess  of  $2.0 million at December 31,
1991 and 1992  (the  "Consolidated  Net  Worth Distribution").  The
Company has made  distributions  of  $2.0  million and $1.0 million
related  to  the  periods   ended   December  31,  1991  and  1992,
respectively.  The committee  representing the creditors has stated
it  does  not  agree  with  the  Company's  interpretation  of  the
Reorganization Plan and believes that additional amounts may be due
under the  Consolidated  Net  Worth  Distribution  provision of the
Reorganization Plan.  The  Company believes that its interpretation
and position on this matter will ultimately prevail.  While the

                           14 of 193

<PAGE>

resolution of  this  and  certain  other  matters  relating  to the
Reorganization Plan may have  an  impact on the Company's financial
results,  these  matters  will  not  impact  the  Company's ongoing
business and operations.   (See  "Item  8. Financial Statements and
Supplementary Data - Note 3 to the Company's Consolidated Financial
Statements" and "Item 3. Legal Proceedings").

The  United  States  Bankruptcy  Court  retains  jurisdiction  over
implementation and interpretation of the Reorganization Plan.

Preferred Stock Redemption
--------------------------

On February 13, 1995 the Company announced that it would redeem all
of its  2.29  million  outstanding  shares  of  Series A Cumulative
Convertible Preferred Stock ("Series  A  Stock") on March 14, 1995.
Holders of Series A Stock were entitled to either have their shares
redeemed by the  Company  at  $25.4625  per  share (the "Redemption
Price"), which represents the redemption  price of $25.00 per share
plus accrued and unpaid dividends  of  $.4625 per share, or convert
their Series A Stock  into  2.7548  shares  of the Company's Common
Stock for each  share  of  Series  A  Stock  converted.  Holders of
Series A Stock who wished to convert their shares into Common Stock
were required  to  deliver  written  notice  of  their  election to
convert  and  tender  the  Series  A  Stock  certificates  properly
endorsed to the redemption  agent,  American Stock Transfer & Trust
Company, no later than 5:00  P.M.  (Eastern Standard Time) on March
9, 1995.  Holders of approximately  2.27 million shares of Series A
Stock converted their shares into approximately 6.25 million shares
of Common Stock.  The remaining  holders of 21,000 shares of Series
A Stock were entitled to  receive only the Redemption Price without
additional interest thereon upon  surrender  of  the Series A Stock
certificates properly endorsed to the redemption agent.

Employees
---------

As of December  31,  1996,  the  Company employed approximately 490
full-time  employees.    None   of   the  Company's  employees  are
represented by a labor union  or covered by a collective bargaining
arrangement.  The Company believes its employee relations are good.

                           15 of 193

<PAGE>

Directors and Executive Officers of the Registrant
--------------------------------------------------

The directors and executive officers of the Company at December 31,
1996 were as follows:


     Name                     Age               Position

Peter J. Ratican               53      Chairman of the Board of
                                       Directors, Chief Executive
                                       Officer and President

Eugene L. Froelich             55      Chief Financial Officer,
                                       Executive Vice President -
                                       Finance and Administration
                                       and Director

Alan D. Bloom                  51      Senior Vice President,
                                       Secretary and General
                                       Counsel

Aivars L. Jerumanis            58      Senior Vice President -
                                       Management Information
                                       Systems and Chief
                                       Information Officer

Richard A. Link                42      Chief Accounting Officer
                                       and Senior Vice President -
                                       Accounting

Warren D. Foon                 40      Vice President, General
                                       Manager - Maxicare
                                       California

Robert J. Landis               37      Treasurer


Sanford N. Lewis               54      Vice President -
                                       Administrative Services

Vicki F. Perry                 44      Vice President, General
                                       Manager - Maxicare Indiana

Claude S. Brinegar             70      Director

Florence F. Courtright         64      Director

Thomas W. Field, Jr.           63      Director

Charles E. Lewis, M.D.         68      Director

Alan S. Manne                  71      Director

                           16 of 193

<PAGE>

Peter J. Ratican was appointed  Chairman of the Board of Directors,
Chief Executive Officer  and  President  of  the  Company in August
1988.  He is  a  member  of  the  California Knox-Keene Health Care
Services  Advisory   Committee,   which   assists   the  California
Department  of  Corporations  in  regulating  prepaid  health plans
(HMOs).  Mr.  Ratican  has  been  a  director  of the Company since
August  1983.    He  received  a  Bachelor  of  Science  degree  in
Accounting from the University of  California at Los Angeles and is
a certified public accountant.

Eugene L. Froelich was appointed Chief Financial Officer, Executive
Vice President - Finance  and  Administration and director in March
1989.  Mr.  Froelich  graduated  from  Adelphi  University and is a
certified public accountant.

Alan D. Bloom has been Senior Vice President, Secretary and General
Counsel to the  Company  since  July  1987.    Mr. Bloom joined the
Company  as  General  Counsel  in  1981.    Mr.  Bloom  received  a
Bachelor's degree in  Biology  from  the  University  of Chicago, a
Master of Public Health from the University of Michigan, and a J.D.
degree from American University.

Aivars  L.  Jerumanis  was   appointed   Senior  Vice  President  -
Management Information Systems and Chief Information Officer of the
Company in  January  1990.    He  received  a  Masters  in Business
Administration  from  Columbia  University,   a  Masters  in  Civil
Engineering from Rensselaer Polytechnic  Institute and a Bachelor's
degree in Civil Engineering from Lafayette College.

Richard A. Link was  appointed  Chief Accounting Officer and Senior
Vice President - Accounting of  the  Company in September 1988.  He
has  a  Bachelor's  degree  in  Business  Administration  from  the
University  of  Southern  California  and  is  a  certified  public
accountant.

Warren D. Foon was appointed Vice President, General Manager of the
California HMO in May of 1995.   Mr. Foon was Vice President - Plan
Operations of the Company from March  of 1989 through April of 1995
and Vice President -  National  Provider  Relations from October of
1986 through February  of  1989.    Mr.  Foon  received a Doctor of
Pharmacy and a Masters in Public Administration from the University
of Southern California and a  Bachelor  of Arts in Biology from the
University of California at Los Angeles.

Robert J. Landis  has  served  as  Treasurer  of  the Company since
November 1988.  Mr. Landis received a Bachelor's degree in Business
Administration  from  the  University  of  Southern  California,  a
Master's degree in  Business  Administration  from California State
University at Northridge and is a certified public accountant.

Sanford N.  Lewis  was  appointed  Vice  President - Administrative
Services of the Company in  February  1996.   He was Associate Vice
President - Underwriting from July  1993  to January 1996 and prior
to that National Director Data  Control.    Mr. Lewis has been with
the Company since 1987.

                           17 of 193

<PAGE>

Vicki F. Perry  was  appointed  Vice  President, General Manager of
Maxicare Indiana, Inc.  in  January  1992.    From  January 1990 to
December  1991  she  served  as  Executive  Vice  President  - Plan
Operations of the Company.    Ms.  Perry  has been with the Company
since 1982.  Ms. Perry is a graduate of Indiana University.

Claude S. Brinegar is  the  retired  Vice  Chairman of the board of
directors and Chief Financial  Officer  of Unocal Corporation.  Mr.
Brinegar has been a director of  the Company since June 1991 and is
also a member of  the  board  of  directors  of Conrail, Inc. and a
visiting scholar at Stanford University.

Florence F. Courtright has  been  a  private investor for more than
the last five years and  was  elected  a director of the Company in
November 1993.    She  is  a  founding  Limited  Partner  of Bainco
International Investors, 1.p.  and  a  Trustee  of Loyola Marymount
University.  Further, Ms.  Courtright  is  a former co-owner of the
Beverly Wilshire Hotel and the Beverly Hills Hotel.

Thomas W. Field, Jr. has  been  President  of Field & Associates, a
management consulting firm, since  October  1989.  Mr. Field served
as Chairman of the Board of ABCO Markets from December 1991 through
January 1996.  ABCO Markets is  in the grocery business.  Mr. Field
has been a director of  the  Company  since  April 1992.  Mr. Field
also holds directorships at Campbell  Soup Company and Stater Bros.
Markets.

Charles E. Lewis has  been  a  Professor of Medicine, Public Health
and Nursing at the University  of  California at Los Angeles, since
1970.  As of July 1993, he  was appointed Director of the Center of
Health Promotion and Disease  Prevention.    He  is a member of the
Institute of  Medicine,  National  Academy  of  Sciences  and  is a
graduate of the Harvard  Medical  School  and  of the University of
Cincinnati School of Public Health where he received a Doctorate of
Science degree.  Dr. Lewis is  a  Regent of the American College of
Physicians and a member of the  Board of Commissioners of the Joint
Commission on Accreditation of Health Care Organizations. Dr. Lewis
has been a director of the Company since August 1983.

Alan S. Manne is currently  a  professor  emeritus and from 1961 to
1992 was a professor of operations research at Stanford University.
He is an author or co-author  of seven books and received his Ph.D.
in economics from Harvard  University.    He is co-organizer of the
International Energy Workshop.   Mr.  Manne  has been a director of
the Company since January 1994.

The Board of Directors  (the  "Board")  is classified into Class I,
Class II and Class III  directors.    Class I directors include Dr.
Lewis and Mr. Brinegar and  they  will  serve until the 1997 annual
meeting  of  stockholders  and  until  their  successors  are  duly
qualified and elected.  Class II directors include Mr. Froelich and
Ms. Courtright and they will serve until the 1998 annual meeting of
stockholders and  until  their  successors  are  duly qualified and
elected.  Class III  directors  include  Mr. Ratican, Mr. Field and
Mr. Manne and they will serve until the 1999 annual meeting of

                           18 of 193

<PAGE>

stockholders and  until  their  successors  are  duly qualified and
elected.  Officers are elected  annually  and serve at the pleasure
of  the  Board,  subject  to  all  rights,  if  any,  under certain
contracts of employment (see "Item 11. Executive Compensation").


                           19 of 193

<PAGE>

Item 2.  Properties
         ----------

The Company's operating facilities are held through leaseholds.  At
December 31, 1996, the  Company leased approximately 217,000 square
feet at 20 locations  with  an  aggregate current monthly rental of
approximately $166,000.  These leases have remaining terms of up to
eight   years.      The   Company's   leased   properties   include
administrative locations  for  the  HMOs  and corporate facilities,
three pharmacies  in  southern  California  and other miscellaneous
facilities.

In June 1994 the  Company  entered  into  a lease for new corporate
office space in Los Angeles commencing  in that month for a term of
72 months.  The lease is  for approximately 83,000 square feet with
a monthly rental  expense  of  approximately  $72,000 excluding the
Company's percentage  share  of  all  increases  in  the landlord's
operating cost of the building.

                           20 of 193

<PAGE>

Item 3.  Legal Proceedings
         -----------------

a.  PENN HEALTH

During the period March 1, 1986  through June 30, 1989, Penn Health
Corporation  ("Penn  Health"),   a   subsidiary   of  the  Company,
contracted with  the  Commonwealth  of  Pennsylvania  Department of
Public Welfare (the  "DPW")  to  provide  a  full  range of managed
health care services to  Medicaid  enrollees under the Pennsylvania
Medical Assistance program known as  the HealthPass Program.  These
services were rendered by providers pursuant to contracts with Penn
Health (the "Penn Health Providers").  The Company believes that as
of the Petition Dates the  DPW  owed  Penn  Health in excess of $24
million plus accrued  interest  in  connection  with the HealthPass
Program.

On February 14, 1990, the Company filed a complaint with the United
States Bankruptcy Court for the Central District of California (the
"Bankruptcy Court")  against  the  DPW  and  the  major Penn Health
Providers to recover preferential  transfers, to compel turnover of
property and to object  to  the  providers' proofs of claim against
Penn  Health  (the  "Bankruptcy   Action").    Proceedings  in  the
Bankruptcy  Action  have  been   held  in  abeyance,  although  the
Bankruptcy Court continues to  retain jurisdiction over the action.
(Penn Health Corporation v. Commonwealth of Pennsylvania Department
of Public Welfare et al. (Case No. AD 90-0244-JW))

On February 27, 1991, the Company  filed a petition against the DPW
with the Pennsylvania  Board  of  Claims  (the  "Board") seeking in
excess of $24 million in  damages  for  monies  due from the DPW in
connection with the HealthPass  Program  plus accrued interest (the
"Board Action").    The  Board  consolidated  the  Board Action for
purposes of trial with  two  separate  actions filed by Penn Health
hospital providers (the  "Hospital  Providers")  and  by a class of
Penn Health  primary  care  physician  providers  (the "PCP Class")
against the DPW to secure  payment  directly  from the DPW for pre-
petition services  rendered  to  HealthPass  members (the "Provider
Actions").  These actions were  set  for  trial by the Board in two
phases; a liability phase and  a damages phase. During the pendency
of the  Provider  Actions  DPW  entered  into  settlements with the
Hospital Providers  and  the  PCP  Class.    In  its  order  on the
liability phase on the  Board  Action  the  Board ruled that: (i) a
contract exists between  Penn  Health  and  the  DPW;  (ii) the DPW
breached the contract;  and  (iii)  Penn  Health  is an independent
general contractor and not an agent  of  the DPW.  The trial on the
damages phase has been held.  The parties are waiting for the Board
to issue its ruling on the damages phase and to enter a judgment in
the Board Action.

The Company's damage  claim  in  the  Board Action is approximately
$43.1 million (inclusive of  accrued  interest through December 31,
1996).  DPW contends  it  is  entitled  to credits for certain pre-
petition payments made to Penn Health Providers and in settling the
Provider Actions, in the aggregate amount of $26.1 million (the

                           21 of 193

<PAGE>

"Credits").  The Company contends  that  the DPW is not entitled to
the Credits.  The  Company  believes  that  its  damage  claims are
meritorious and that it  will  prevail  in  the Board Action. (Penn
Health Corporation v.  Commonwealth  of Pennsylvania, Department of
Public Welfare (Doc. No. 1515)).

On  June  7  and  19,  1996,  the  Company  and  Penn  Health filed
complaints in the Bankruptcy  Court against the Hospital Providers,
and the PCP  Class  and  its  counsel,  respectively (the "Provider
Bankruptcy Actions"), for violating the  terms of the Company's and
Penn Health's Joint  Plan  of  Reorganization  (the "Plan") and the
Bankruptcy Court's order  confirming  the  Plan.    In the Provider
Bankruptcy Actions the Company  and  Penn  Health seek, among other
things,  turnover  and  the  recovery  of  payments  (plus  accrued
interest) made by the DPW  after  confirmation  of the Plan, to the
Hospital Providers in the amount  of  $13 million and the PCP Class
in the amount of  $2.1  million (collectively, the "DPW Payments"),
as  unlawful  Plan   distributions   and  post-petition  transfers.
(Maxicare Health Plans, Inc. and  Penn Health Corporation v. Albert
Einstein et al. (Case No. AD96-01611-JW));  (Maxicare Health Plans,
Inc. and Penn Health Corporation v.  Faezeh Behjat et al. (Case No.
AD96-01668-JW)).   In  November  1996,  the  Defendants' motions to
dismiss  the  Provider  Bankruptcy   Actions  were  denied  by  the
Bankruptcy Court and  the  parties  are  engaged  in discovery. The
Company believes that its claims in the Provider Bankruptcy Actions
are  meritorious  and  that  it  will  prevail  in  these  actions.
Notwithstanding  the  foregoing,  the  Company  believes  that  its
aggregate  recovery  from  the   Board   Action  and  the  Provider
Bankruptcy Actions will not exceed  the aggregate amount of damages
plus accrued interest sought by Penn Health in the Board Action.

Pre-petition  amounts  due  to  Penn  Health  Providers  and  other
creditors of  Penn  Health  will  be  satisfied  from Penn Health's
assets pursuant to the Reorganization  Plan.   In no event will the
Company be required to  fund  from  its  current cash resources the
payment of Penn  Health's  pre-petition  claims.    However, in the
event the DPW prevails on  certain  issues in the Board Action this
may result  in  a  material  reduction  in  the  Company's recorded
estimate of amounts due the Company from the DPW.

b.  OTHER LITIGATION

The Company is a defendant in a number of other lawsuits arising in
the ordinary  course  from  the  operations  of  the  HMOs and MLH,
including cases in which  the  plaintiffs assert claims against the
Company or third parties that  assert breach of contract, indemnity
or  contribution  claims  against   the  Company  for  malpractice,
negligence, bad faith in  the  failure  to  pay  claims on a timely
basis or denial of  coverage  seeking  compensatory and, in certain
instances, punitive damages in an indeterminate amount which may be
material and/or  seeking  other  forms  of  equitable  relief.  The
Company does not believe  that  the ultimate determination of these
cases will either individually or in the aggregate have a material,
adverse effect on the Company's business or operations.

                           22 of 193

<PAGE>

Item 4. Submission of Matters to a Vote of Security Holders
        ---------------------------------------------------

No matter was submitted to  a  vote  of security holders during the
three months ended December 31, 1996.

                           23 of 193

<PAGE>

                              PART II
                             --------


Item 5.  Market for the Registrant's Common Stock and Related
         ----------------------------------------------------
         Stockholder Matters
         -------------------

(a) Market Information

The Company's  Common  Stock  appears  on  the  Nasdaq Stock Market
("NASDAQ") under the trading symbol MAXI.

The following table sets  forth  the  high  and low sale prices per
share on the NASDAQ.  The quotations are interdealer prices without
retail mark-ups, markdowns, or  commissions,  and may not represent
actual transactions.


Common Stock                       Sale Price
                                 ---------------
                                  High     Low
                                 ------   ------
1995    First Quarter            $19.25   $14.75

        Second Quarter           $19.00   $14.00

        Third Quarter            $19.25   $14.25

        Fourth Quarter           $27.75   $16.13

1996    First Quarter            $31.13   $24.13

        Second Quarter           $28.50   $18.88

        Third Quarter            $21.50   $13.50

        Fourth Quarter           $23.63   $18.25


(b) Holders

There were 10,205 holders of  record  of the Company's Common Stock
as of December 31, 1996.  As of such date, the Company held 616,406
shares of Common  Stock  (the  "Unallocated  Shares") as disbursing
agent for the benefit  of  creditors  and  holders of interests and
equity claims under the  Reorganization  Plan.   Of the Unallocated
Shares held as of  December  31,  1996,  548,514  were held for the
benefit  of  creditors  of  the  Company's  operating  subsidiaries
(Reorganization Plan classes  5A  through  5H),  37,346 shares were
held for bank group  creditors  (Reorganization  Plan class 7), and
30,546 shares were  held  for  bondholder creditors (Reorganization
Plan classes 8A through  8D).  As  of  December 31, 1996, no shares
were being held for the benefit of Maxicare Health Plans, Inc.

                           24 of 193

<PAGE>

creditors (Reorganization Plan  class  9);  however, certain of the
shares held for the benefit of Reorganization Plan classes 7 and 8A
through 8D  will  be  reallocated  to  Reorganization  Plan class 9
pursuant to a formula set  forth  in  the Reorganization Plan.  The
Reorganization Plan provides that until  such  time as any share of
Common Stock reserved for a  holder  of an allowed claim or allowed
interest under the Reorganization Plan is allocated, the disbursing
agent shall deliver an  irrevocable  proxy  to vote the Unallocated
Shares to the independent directors  of  the Board (as such term is
defined by the  Reorganization  Plan).   Currently, the independent
directors are Messrs.   Brinegar,  Field,  Lewis  and Manne and Ms.
Courtright (the "Independent Directors").   The Reorganization Plan
provides  that  the  Unallocated  Shares  shall  be  voted  in  the
following manner:

   (i) 548,514 shares which were held in the claims reserves
   as of December 31, 1996 for the holders of Reorganization
   Plan classes 5A through  5H and Reorganization Plan class
   9 allowed claims, shall (a)  as  to proposals made by the
   Company, be voted in the  same manner and the same degree
   as all of the allocated  shares  of Common Stock; and (b)
   as to proposals made by  any  person or entity other than
   the Company, be voted  in  accordance  with the vote of a
   majority of the Independent Directors; and

   (ii) 67,892 shares which were held in the claims reserves
   as of December  31,  1996  for  holders of Reorganization
   Plan class 7 and  Reorganization  Plan classes 8A through
   8D allowed claims, shall be  voted in the same manner and
   the same degree as all  of the allocated shares of Common
   Stock.

(c) Dividends

The Company has not paid any cash dividends on its Common Stock and
has no current intention of doing so in the foreseeable future.

                           25 of 193

<PAGE>

Item 6. Selected Financial Data
        -----------------------
<TABLE>
<CAPTION>
                                                                At And For The Years Ended December 31,
                                                                ---------------------------------------
(Amounts in thousands except per share and
 membership data)
                                                           1996       1995      1994       1993       1992
                                                         --------   --------  --------   --------   --------
<S>                                                     <C>        <C>       <C>        <C>        <C>
REVENUES................................................ $562,765   $477,344  $432,173   $440,186   $414,454
                                                         --------   --------  --------   --------   --------
EXPENSES
   Health care expenses.................................  503,006    414,296   379,608    394,721    362,627
   Marketing, general and administrative expenses.......   48,753     43,993    44,084     40,998     37,930
   Depreciation and amortization........................    1,279      1,245     2,087      4,054      5,238
   Reorganization expenses..............................                                                 895
                                                         --------   --------  --------   --------   --------
TOTAL EXPENSES..........................................  553,038    459,534   425,779    439,773    406,690
                                                         --------   --------  --------   --------   --------
INCOME FROM OPERATIONS..................................    9,727     17,810     6,394        413      7,764

   Investment income....................................    6,528      6,299     3,319      2,636      3,121
   Interest expense.....................................      (97)       (58)      (36)       (32)    (2,773)
                                                         --------   --------  --------   --------   --------
INCOME BEFORE INCOME TAXES AND EXTRAORDINARY ITEMS......   16,158     24,051     9,677      3,017      8,112

INCOME TAX BENEFIT......................................    3,267      3,625     3,658      2,571      3,058
                                                         --------   --------  --------   ---------  --------
INCOME BEFORE EXTRAORDINARY ITEMS.......................   19,425     27,676    13,335      5,588     11,170

EXTRAORDINARY ITEMS (net of income taxes of $0) (1).....                                             (14,241)
                                                         --------   --------  --------   --------   --------
NET INCOME (LOSS).......................................   19,425     27,676    13,335      5,588     (3,071)

PREFERRED STOCK DIVIDENDS...............................                        (5,280)    (5,400)    (4,350)
                                                         --------   --------  --------   --------   --------
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS...... $ 19,425   $ 27,676  $  8,055   $    188   $ (7,421)
                                                         ========   ========  ========   ========   ========

NET INCOME (LOSS) PER COMMON AND COMMON EQUIVALENT
  SHARE (2):
Primary
  Income Before Extraordinary Items..................... $   1.05   $   1.63  $    .73   $    .02   $    .66
  Extraordinary Items (1)...............................                                               (1.37)
                                                         --------   --------  --------   --------   --------
  Net Income (Loss)..................................... $   1.05   $   1.63  $    .73   $    .02   $   (.71)
                                                         ========   ========  ========   ========   ========
  Weighted average number of common and common
   equivalent shares outstanding........................   18,415     16,978    11,064     10,416     10,414

Fully Diluted
  Income Before Extraordinary Items..................... $   1.05   $   1.50  $    .73   $    .02   $    .66
  Extraordinary Items (1)...............................                                               (1.37)
                                                         --------   --------  --------   --------   --------
  Net Income (Loss)..................................... $   1.05   $   1.50  $    .73   $    .02   $   (.71)
                                                         ========   ========  ========   ========   ========
  Weighted average number of common and common
   equivalent shares outstanding........................   18,455     18,410    11,064     10,416     10,414

BALANCE SHEET DATA:
  Total assets.........................................  $184,522   $162,836  $128,692   $106,807   $ 97,278
  Total indebtedness (3)...............................  $ 68,276   $ 68,131  $ 63,342   $ 54,422   $ 45,217
  Shareholders' equity.................................  $116,246   $ 94,705  $ 65,350   $ 52,385   $ 52,061

MEMBERSHIP DATA:
  Number of members....................................   423,000    345,000   292,000    308,000    283,000

                           25 of 193

<PAGE>

                                  Notes to Selected Financial Data



(1)   Includes a 1992 write-off of unamortized original issue discount and unamortized issuance costs
      on the Senior Notes that were redeemed and a 1992 accrual of a distribution payable pursuant to
      the Reorganization Plan based on the Company's  consolidated net worth as of December 31, 1992.
      (See  "Item  8.  Financial  Statements  and  Supplementary  Data  -  Note  2  to  the Company's
      Consolidated Financial Statements").

(2)   For the years ended December 31, 1994, 1993  and 1992 fully diluted earnings per share exceeded
      primary earnings per share (i.e.,  the  calculations  were "anti-dilutive") so primary earnings
      per share are reported as fully diluted.

(3)   Includes long-term liabilities of $511, $1,155,  $887,  $504,  and $1,015, in 1996, 1995, 1994,
      1993 and 1992, respectively.

</TABLE>

                           27 of 193

<PAGE>


Item 7. Management's Discussion and Analysis of Financial Condition
        -----------------------------------------------------------
        and Results of Operations
        -------------------------

The year ended December 31, 1996 compared to the year ended
-----------------------------------------------------------
December 31, 1995.
------------------

The Company reported net income of $19.4 million for the year ended
December 31, 1996 compared to  $27.7  million for 1995.  Net income
per common share on a  fully  diluted  basis was $1.05 for the year
ended December 31, 1996 compared to $1.50 for 1995.

For the year ended December 31, 1996, the Company reported revenues
of $562.8 million,  an  increase  of  $85.4  million  or 17.9% when
compared to 1995.   Commercial  premiums increased $38.3 million or
9.4%  to  $447.2  million  as  a  result  of  a  14.7%  increase in
membership primarily in California and Indiana, offset in part by a
5.7% decline in the  average  premium  revenue per member per month
("PMPM"). Governmental premiums increased $47.6 million or 79.0% to
$107.8 million as  a  result  of  an  88.3%  increase in membership
primarily generated by growth in  the  Medicaid line of business in
California and  Indiana.  The  premium  PMPM  for  the Medicaid and
Medicare lines of business increased by .7% and 5.8%, respectively,
however, the average premium revenue PMPM for governmental premiums
declined by 4.9% as a result of greater growth in the lower premium
PMPM  Medicaid  line  of  business.    Other  Income  includes  the
recording in the  fourth  quarter  of  1996  a  $5.2 million credit
resulting from a  reduction  in  an  estimated distribution payable
pursuant to  the  Reorganization  Plan.    (See  "Item 8. Financial
Statements  and  Supplementary  Data  -  Note  3  to  the Company's
Consolidated Financial Statements").

Health  care  expenses,  including  increases  in  estimated claims
payable in the fourth  quarter  of  1996,  increased 21.4% or $88.7
million for the year ended  December  31, 1996 as compared to 1995.
Health care  expenses  as  a  percentage  of  premium revenues (the
"medical loss ratio") increased 2.3 percentage points to 90.6% as a
result of higher prescription drug costs, the effect of the decline
in the average commercial premium  revenue PMPM particularly in the
California HMO, and the  growth  in  the  higher medical loss ratio
Medicaid line of business.

Marketing, general and administrative ("M,G&A") expenses were $48.8
million for the year ended  December  31, 1996 as compared to $44.0
million for 1995.    M,G&A  expenses  as  a  percentage of revenues
decreased from 9.2% to 8.7% for the year ended December 31, 1996 as
compared to the same period in 1995.

Depreciation and amortization expense  for  the year ended December
31, 1996 remained relatively constant at $1.3 million when compared
to 1995.

Investment income for the year ended December 31, 1996 increased by
$.2 million to  $6.5  million  as  compared  to  1995.   The slight
increase in investment income was  primarily due to larger cash and
investment balances.

                           28 of 193

<PAGE>

The Company reported a $3.3 million income tax benefit for the year
ended December 31, 1996,  primarily  due  to  the recognition of an
additional $4.0 million tax benefit ($3.4 million recognized in the
fourth quarter) as a result  of the Company increasing its deferred
tax asset  in  accordance  with  Statement  of Financial Accounting
Standards No.  109  "Accounting  for  Income  Taxes".   The Company
reported a $3.6  million  income  tax  benefit  for  the year ended
December 31, 1995, primarily due  to  the recognition in the fourth
quarter of an additional $4.0  million  tax benefit.  (See "Item 8.
Financial  Statements  and  Supplementary  Data  -  Note  7  to the
Company's Consolidated Financial Statements").

The year ended December 31, 1995 compared to the year ended
-----------------------------------------------------------
December 31, 1994.
------------------

The Company reported net income of $27.7 million for the year ended
December 31, 1995 compared to  $13.3  million for 1994.  Net income
per common share on a  fully  diluted  basis increased to $1.50 for
the year ended December 31, 1995 compared to $.73 for 1994.

For the year ended December 31, 1995, the Company reported revenues
of $477.3 million,  an  increase  of  $45.1  million  or 10.4% when
compared to 1994.   Commercial  premiums increased $10.6 million or
2.6% to $408.9 million as a result of a 1.0% increase in membership
primarily in California and  Indiana,  and  a  1.7% increase in the
average premium  revenue  PMPM.    Governmental  premiums increased
$27.9 million or 86.3% to  $60.2  million  as  a result of a 136.9%
increase  in  membership  primarily  generated  by  growth  in  the
Medicaid line of business in  California and Indiana.  Other Income
primarily relates to the  recording  in  the fourth quarter of 1995
additional amounts  due  the  Company  with  respect  to  the prior
operation of a governmental managed care program.

Health  care  expenses,  including  increases  in  estimated claims
payable in the  fourth  quarter  of  1995,  increased 9.1% or $34.7
million for the year ended  December  31, 1995 as compared to 1994.
The medical loss ratio increased .2 percentage point to 88.3%.

M,G&A expenses were $44.0 million  for  the year ended December 31,
1995 as compared to  $44.1  million  for  1994.  M,G&A expenses for
1994 included a  $3.0  million  litigation  charge  recorded in the
second quarter of that  year.    M,G&A  expenses as a percentage of
revenues decreased from 9.5%  to  9.2%  for the year ended December
31, 1995 as compared to 1994.

Depreciation and amortization expense  for  the year ended December
31, 1995 decreased $.8 million  from  the $2.1 million reported for
1994 because  of  the  expiration  of  capital  leases  and certain
equipment that became fully depreciated.


                           29 of 193

<PAGE>

Investment income for the year ended December 31, 1995 increased by
$3.0 million to $6.3  million  as  compared  to  the same period in
1994.  The increased investment income was due to higher investment
yields  and   larger   cash   and   investment  balances  primarily
attributable to the 1995 results of operations.

The Company reported a $3.6 million income tax benefit for the year
ended December 31, 1995,  primarily  due  to the recognition in the
fourth quarter of  an  additional  $4.0  million  tax  benefit as a
result  of  the  Company  increasing  its  deferred  tax  asset  in
accordance with Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes".  The Company reported a $3.7 million
income tax benefit for the  year ended December 31, 1994, primarily
due to the recognition in the  fourth quarter of an additional $4.0
million tax benefit.

Maxicare concluded the redemption  of  its  Series A Stock on March
14, 1995.  As a result of this redemption, the Company is no longer
required to pay Series A  Stock  dividends and paid no dividends in
1995.  For the year ended  December  31, 1994 the Company paid $5.3
million in dividends.

Liquidity and Capital Resources

All of MHP's  operational  subsidiaries  are direct subsidiaries of
MHP.  The Company's HMOs  are  federally qualified and are licensed
in the states  where  they  operate.    Certain  of MHP's operating
subsidiaries  are  subject  to   state  regulations  which  require
compliance with  certain  statutory  deposit, dividend distribution
and  net  worth  requirements.      To  the  extent  the  operating
subsidiaries must comply with these  regulations, they may not have
the  financial  flexibility  to  transfer  funds  to  MHP.    MHP's
proportionate   share   of    net   assets   (after   inter-company
eliminations) which, at December  31,  1996, may not be transferred
to MHP by  subsidiaries  in  the  form  of  loans, advances or cash
dividends without the consent of  a  third  party is referred to as
"Restricted Net Assets".  Restricted  Net Assets of these operating
subsidiaries were $34.9 million at  December 31, 1996, with deposit
requirements and limitations  imposed  by  state regulations on the
distribution of  dividends  representing  $13.0  million  and $12.6
million of the Restricted  Net  Assets, respectively, and net worth
requirements  in  excess  of   deposit  requirements  and  dividend
limitations representing the remaining $9.3 million.  The Company's
total  Restricted  Net  Assets  at  December  31,  1996  were $35.1
million.    In  addition  to   the  $36.9  million  in  cash,  cash
equivalents and marketable  securities  held  by MHP, approximately
$9.7 million  in  funds  held  by  operating  subsidiaries could be
considered available for  transfer  to  MHP  at  December 31, 1996.
(See "Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K - Schedule I").

The operating HMOs currently  pay  monthly  fees to MHP pursuant to
administrative   services   agreements   for   various  management,
financial, legal, computer  and  telecommunications  services.  The
Company believes that for the foreseeable future it will have

                           30 of 193

<PAGE>

sufficient resources  to  fund  ongoing  operations  and  remain in
compliance with statutory financial requirements.

With a  current  ratio  (i.e.,  current  assets  divided by current
liabilities)  of  2.5  and  less  than  $.6  million  of  long-term
liabilities at December 31, 1996, the Company does not believe that
it will need additional working  capital to fund its operations for
the foreseeable future.    Although  the  Company  believes that it
would be able to raise additional working capital through either an
equity offering or borrowings if  it so desired, the Company cannot
state with any degree of  certainty at this time whether additional
equity capital or working capital would  be available to it, and if
available, would  be  at  terms  and  conditions  acceptable to the
Company.

Forward Looking Information

This Annual  Report  on  Form  10-K  contains  and  incorporates by
reference  forward  looking  statements  within  the  "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995.
Reference is made in particular  to  the discussion set forth under
"Item  7.  Management's   Discussion   and  Analysis  of  Financial
Condition and Results of Operations", and under "Item 1. Business".
Such  statements  are  based  on  certain  assumptions  and current
expectations  that  involve  a  number  of  uncertainties.   Actual
results could differ materially from those projected in the forward
looking statements.

                           31 of 193

<PAGE>

Item 8. Financial Statements and Supplementary Data
        -------------------------------------------


                           32 of 193

<PAGE>

                  REPORT OF INDEPENDENT AUDITORS
                  ------------------------------



The Board of Directors and Shareholders
Maxicare Health Plans, Inc.


We have audited  the  accompanying  consolidated  balance sheets of
Maxicare Health Plans, Inc. as  of  December 31, 1996 and 1995, and
the  related  consolidated  statements  of  operations,  changes in
shareholders' equity and cash flows for  each of the three years in
the period ended December 31,  1996.   Our audits also included the
information  with  respect  to  the  financial  statement schedules
listed in the index at item  14(a).  These financial statements and
schedules are the responsibility of  the Company's management.  Our
responsibility  is  to  express   an  opinion  on  these  financial
statements and schedules based on our audits.

We conducted  our  audits  in  accordance  with  generally accepted
auditing standards.    Those  standards  require  that  we plan and
perform the audit to obtain  reasonable assurance about whether the
financial statements are free  of  material misstatement.  An audit
includes  examining,  on  a  test  basis,  evidence  supporting the
amounts and disclosures in the financial statements.  An audit also
includes assessing the  accounting  principles used and significant
estimates made by  management,  as  well  as evaluating the overall
financial statement  presentation.    We  believe  that  our audits
provide a reasonable basis for our opinion.

In our opinion, the financial  statements referred to above present
fairly,  in  all  material  respects,  the  consolidated  financial
position of Maxicare Health  Plans,  Inc.  at December 31, 1996 and
1995, and the consolidated results  of  its operations and its cash
flows for each of the three  years in the period ended December 31,
1996 in conformity  with  generally accepted accounting principles.
Also, in our  opinion,  the  related financial statement schedules,
when considered in relation to the basic financial statements taken
as a whole, present fairly in all material respects the information
set forth therein.





                                   ERNST & YOUNG LLP


February 7, 1997
Los Angeles, California

                           33 of 193

<PAGE>

                MAXICARE HEALTH PLANS, INC.
                CONSOLIDATED BALANCE SHEETS
          (Amounts in thousands except par value)

<TABLE>
<CAPTION>

                                                                   December 31,
                                                                1996         1995
CURRENT ASSETS                                               ---------    ---------
<S>                                                        <C>          <C>
  Cash and cash equivalents - Note 2........................ $  55,568    $  49,170
  Marketable securities - Note 2............................    58,650       49,659
  Accounts receivable, net - Note 2.........................    33,107       32,946
  Deferred tax asset - Note 7...............................    18,000       14,000
  Prepaid expenses..........................................     3,001        1,195
  Other current assets......................................       279          294
                                                             ---------    ---------
    TOTAL CURRENT ASSETS....................................   168,605      147,264
                                                             ---------    ---------
PROPERTY AND EQUIPMENT
  Leasehold improvements....................................     5,441        5,441
  Furniture and equipment...................................    18,875       18,849
                                                             ---------    ---------
                                                                24,316       24,290
    Less accumulated depreciation and amortization..........    22,875       21,755
                                                             ---------    ---------
    NET PROPERTY AND EQUIPMENT..............................     1,441        2,535
                                                             ---------    ---------
LONG-TERM ASSETS
  Long-term receivables.....................................       109          200
  Restricted investments - Note 2...........................    14,099       12,593
  Intangible assets, net....................................       268          244
                                                             ---------    ---------
    TOTAL LONG-TERM ASSETS..................................    14,476       13,037
                                                             ---------    ---------

    TOTAL ASSETS............................................ $ 184,522    $ 162,836
                                                             =========    =========
CURRENT LIABILITIES
  Estimated claims and incentives payable................... $  48,530    $  46,232
  Accounts payable..........................................       711          689
  Deferred income...........................................     7,234        5,272
  Accrued salary expense....................................     3,376        3,296
  Payable to disbursing agent - Note 3......................     1,000        6,248
  Other current liabilities.................................     6,914        5,239
                                                             ---------    ---------
    TOTAL CURRENT LIABILITIES...............................    67,765       66,976
LONG-TERM LIABILITIES.......................................       511        1,155
                                                             ---------    ---------
    TOTAL LIABILITIES.......................................    68,276       68,131
                                                             ---------    ---------
COMMITMENTS AND CONTINGENCIES - Note 5

SHAREHOLDERS' EQUITY
  Common stock, $.01 par value - 40,000 shares authorized,
    1996 - 17,565 shares and 1995 - 17,420 shares issued and
    outstanding - Note 6....................................       176          174
  Additional paid-in capital................................   249,804      247,690
  Accumulated deficit.......................................  (133,734)    (153,159)
                                                             ---------    ---------

    TOTAL SHAREHOLDERS' EQUITY..............................   116,246       94,705
                                                             ---------    ---------
  TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY..............   $ 184,522    $ 162,836
                                                             =========    =========



                      See notes to consolidated financial statements.
</TABLE>

                           34 of 193

<PAGE>

                  MAXICARE HEALTH PLANS, INC.
              CONSOLIDATED STATEMENTS OF OPERATIONS
          (Amounts in thousands except per share data)


<TABLE>
<CAPTION>


                                                           Years ended December 31,
                                                         1996       1995       1994
                                                       --------   --------   --------
<S>                                                   <C>        <C>        <C>
REVENUES
   Commercial premiums................................ $447,151   $408,901   $398,348
   Governmental premiums..............................  107,819     60,233     32,330
   Other income.......................................    7,795      8,210      1,495
                                                       --------   --------   --------
     TOTAL REVENUES...................................  562,765    477,344    432,173
                                                       --------   --------   --------
EXPENSES
   Physician services.................................  221,259    183,918    170,382
   Hospital services..................................  188,227    148,546    128,790
   Outpatient services................................   79,403     67,482     64,145
   Other health care expense..........................   14,117     14,350     16,291
                                                       --------   --------   --------
     TOTAL HEALTH CARE EXPENSES.......................  503,006    414,296    379,608

   Marketing, general and administrative expenses.....   48,753     43,993     44,084
   Depreciation and amortization......................    1,279      1,245      2,087
                                                       --------   --------   --------
     TOTAL EXPENSES...................................  553,038    459,534    425,779
                                                       --------   --------   --------
INCOME FROM OPERATIONS................................    9,727     17,810      6,394

   Investment income..................................    6,528      6,299      3,319
   Interest expense...................................      (97)       (58)       (36)
                                                       --------   --------   --------
INCOME BEFORE INCOME TAXES............................   16,158     24,051      9,677

INCOME TAX BENEFIT....................................    3,267      3,625      3,658
                                                       --------   --------   --------
NET INCOME............................................   19,425     27,676     13,335

PREFERRED STOCK DIVIDENDS.............................                         (5,280)
                                                       --------   --------   --------
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS..........  $ 19,425   $ 27,676   $  8,055
                                                       ========   ========   ========

NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE
   - Note 2:

Primary
  Primary Earnings Per Common Share................... $   1.05   $   1.63   $    .73
                                                       ========   ========   ========
  Weighted average number of common and common
     equivalent shares outstanding....................   18,415     16,978     11,064
                                                       ========   ========   ========

Fully Diluted
  Fully Diluted Earnings per Common Share............. $   1.05   $   1.50   $    .73
                                                       ========   ========   ========
  Weighted average number of common and common
     equivalent shares outstanding....................   18,455     18,410     11,064
                                                       ========   ========   ========





                      See notes to consolidated financial statements.
</TABLE>

                           35 of 193

<PAGE>

                  MAXICARE HEALTH PLANS, INC.
              CONSOLIDATED STATEMENTS OF CASH FLOWS
                     (Amounts in thousands)

<TABLE>
<CAPTION>
                                                                      Years ended December 31,
                                                                     1996       1995       1994
                                                                   --------   --------   --------
<S>                                                              <C>        <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ......................................................  $ 19,425   $ 27,676   $ 13,335
Adjustments to reconcile net income to net cash provided
by operating activities:
  Depreciation and amortization..................................     1,279      1,245      2,087
  Benefit from deferred income taxes.............................    (4,000)    (4,000)    (4,000)
  Amortization of restricted stock...............................       699        583
  Provision for long-term receivables valuation allowance........                2,004
  Changes in assets and liabilities:
    (Increase) decrease in accounts receivable...................      (161)   (14,632)       860
    Increase (decrease) in estimated claims and
      incentives payable.........................................     2,298       (863)     8,200
    Increase (decrease) in deferred income.......................     1,962      2,934       (344)
    Changes in other miscellaneous assets and liabilities........    (5,529)     3,345      1,582
                                                                   --------   --------   --------
Net cash provided by operating activities........................    15,973     18,292     21,720
                                                                   --------   --------   --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Dispositions of property and equipment.........................                    5         15
  Purchases of property and equipment............................       (81)      (250)      (313)
  (Increase) decrease in restricted investments..................    (1,506)    (1,640)     2,657
  Reductions to long-term receivables............................        91         81         69
  Additions to long-term receivables.............................                            (350)
  Proceeds from sales and maturities of marketable securities....    51,495     48,460     78,047
  Purchases of marketable securities.............................   (60,486)   (54,561)  (102,157)
                                                                   --------   --------   --------
Net cash used for investing activities...........................   (10,487)    (7,905)   (22,032)
                                                                   --------   --------   --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Payments on capital lease obligations..........................      (505)      (171)      (132)
  Stock options exercised........................................     1,417      1,621        717
  Redemption of preferred stock..................................                 (525)
  Payment of preferred stock dividends...........................                          (5,280)
  Warrants exercised.............................................                           4,193
                                                                   --------   --------   --------
Net cash provided by (used for) financing activities.............       912        925       (502)
                                                                   --------   --------   --------
Net increase (decrease) in cash and cash equivalents.............     6,398     11,312       (814)
Cash and cash equivalents at beginning of year...................    49,170     37,858     38,672
                                                                   --------   --------   --------
Cash and cash equivalents at end of year.........................  $ 55,568   $ 49,170   $ 37,858
                                                                   ========   ========   ========

Supplemental disclosures of cash flow information:
    Cash paid during the year for -
      Interest...................................................  $    106   $     37   $     32
      Income taxes...............................................  $    347   $  2,689   $    163

Supplemental schedule of non-cash investing activities:
    Capital lease obligations incurred for purchase of property
      and equipment and intangible assets........................             $    963   $    659

Supplemental schedule of non-cash financing activities:
    Reclassification of preferred stock capital accounts
      to common stock capital accounts pursuant to the
      conversion of preferred stock to common stock..............             $ 53,195   $  2,580
    Issuance of restricted common stock..........................             $  2,096




                          See notes to consolidated financial statements.

                           36 of 193

</TABLE>
<PAGE>


                    MAXICARE HEALTH PLANS, INC.
     CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                       (Amounts in thousands)




<TABLE>
<CAPTION>

                                  Number of             Number of             Additional
                                  Preferred  Preferred   Common      Common    Paid-in    Accumulated
                                   Shares      Stock     Shares      Stock     Capital      Deficit      Total
                                  ---------  ---------  ---------    ------   ----------  -----------   --------

<S>                              <C>        <C>        <C>        <C>        <C>         <C>           <C>
Balances at December 31, 1993....   2,400       $24      10,033       $100    $241,151    $(188,890)    $ 52,385

    Stock options exercised......                            88          1         716                       717

    Warrants exercised...........                           420          4       4,189                     4,193

    Preferred stock converted
      to common stock............    (110)       (1)        309          3          (2)

    Preferred stock dividends....                                                            (5,280)      (5,280)

    Net income...................                                                            13,335       13,335
                                    -----       ---      ------       ----    --------    ---------     --------

Balances at December 31, 1994....   2,290        23      10,850        108     246,054     (180,835)      65,350

    Stock options exercised......                           189          2       1,619                     1,621

    Restricted stock issued......                           130          1          (1)

    Restricted stock amortized...                                                  583                       583

    Preferred stock converted
      to common stock............  (2,269)      (23)      6,251         63         (40)

    Preferred stock redeemed.....     (21)                                        (525)                     (525)

    Net income...................                                                            27,676       27,676
                                    -----       ---      ------       ----    --------    ---------     --------

Balances at December 31, 1995....       0         0      17,420        174     247,690     (153,159)      94,705

    Stock options exercised......                           145          2       1,415                     1,417

    Restricted stock amortized...                                                  699                       699

    Net income...................                                                            19,425       19,425
                                    -----       ---      ------       ----    --------    ---------     --------

Balances at December 31, 1996....       0       $ 0      17,565       $176    $249,804    $(133,734)    $116,246
                                    =====       ===      ======       ====    ========    =========     ========






                         See notes to consolidated financial statements.

                           37 of 193

</TABLE>
<PAGE>


                   MAXICARE HEALTH PLANS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1 - BUSINESS DESCRIPTION

Maxicare Health Plans, Inc.,  a  Delaware corporation ("MHP"), is a
holding company which  owns  various subsidiaries, primarily health
maintenance   organizations   ("HMOs").   MHP   operates   HMOs  in
California, Indiana,  Illinois,  Louisiana,  North  Carolina, South
Carolina and Wisconsin.  All  of MHP's HMOs are federally qualified
by the United States  Department  of  Health and Human Services and
are generally regulated by the Department of Insurance of the state
in which they are  domiciled  (except  the California HMO, which is
regulated by the California Department of Corporations).

Maxicare Life  and  Health  Insurance  Company  ("MLH"), a licensed
insurance company  and  wholly-owned  subsidiary  of  MHP, operates
preferred provider  organizations  ("PPOs")  in  Illinois, Indiana,
Louisiana,  North   Carolina   and   California   which  constitute
approximately  2%  of  the   consolidated  enrollment  of  MHP  and
subsidiaries (the "Company") at  December  31,  1996.  In addition,
MLH  writes  policies  for  group  life  and  accidental  death and
dismemberment insurance; however, these  lines  of business make up
less than 1% of the Company's  revenues for the year ended December
31, 1996.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation

The  accompanying  consolidated  financial  statements  include the
accounts of the Company.  All significant intercompany balances and
transactions have been eliminated.

Use of Estimates

The  preparation  of  the   consolidated  financial  statements  in
conformity with generally  accepted  accounting principles requires
management  to  make  estimates  and  assumptions  that  affect the
amounts  reported  in  the  consolidated  financial  statements and
accompanying  notes.    Actual  results  could  differ  from  these
estimates.

Cash and Cash Equivalents

The Company considers all  highly  liquid investments that are both
readily convertible into known amounts of cash and mature within 90
days from their date of purchase to be cash equivalents.

                           38 of 193

<PAGE>

Cash and cash equivalents consist of the following at December 31:

                                        1996        1995
  (Amounts in thousands)              -------     -------
  Cash..............................  $ 5,378     $ 6,160
  Certificates of deposit...........    8,163       8,537
  Commercial paper..................   13,535      10,277
  Money market funds................    9,787       6,093
  Repurchase agreements.............    3,258       8,347
  U.S. Government obligations.......   15,447       9,756
                                      -------     -------
                                      $55,568     $49,170
                                      =======     =======


Investments

Effective  January  1,  1994,  the  Company  adopted  Statement  of
Financial Accounting  Standards  ("SFAS")  No.  115 "Accounting for
Certain Investments in Debt and Equity Securities".  Realized gains
and losses and unrealized losses  judged to be other than temporary
with respect to  available-for-sale and held-to-maturity securities
are included in  the  determination  of  net  income.   The cost of
securities sold is  based  on  the  specific identification method.
Fair values of  marketable  securities  are  based  on published or
quoted market prices.

The Company has  designated  its  marketable securities included in
current assets as  available-for-sale.    Such securities have been
recorded at amortized cost as  the  unrealized gain or loss in such
securities is immaterial.

The  Company's   restricted   investments   consist  of  securities
restricted to specific purposes as required by various governmental
regulations.  These  securities  have  been  designated as held-to-
maturity as the Company has the intent and the ability to hold them
to maturity.  These securities are stated at amortized cost.

Prior  to  the  adoption  of  SFAS  No.  115,  the  Company carried
marketable  securities  at  amortized  cost  or  at  the  lower  of
amortized cost or fair value.  The  adoption of SFAS No. 115 had no
material effect on the  carrying  value of marketable securities as
of January 1, 1994.

                           39 of 193

<PAGE>

The following is a  summary  of  investments  at December 31 (gross
unrealized gains and losses are immaterial):


<TABLE>
<CAPTION>
                                        1996                        1995
                                ----------------------     -----------------------
                                             Estimated                   Estimated
                                Amortized      Fair        Amortized       Fair
(Amounts in thousands)            Cost         Value         Cost          Value
                                ---------    ---------     ---------     ---------
<S>                            <C>          <C>           <C>           <C>
Available-for-sale:
  U.S. Government obligations..  $48,467      $48,354       $38,834       $39,074

  Corporate notes..............    9,632        9,700        10,763        10,980

  Other........................      551          564            62            54
                                 -------      -------       -------       -------
                                 $58,650      $58,618       $49,659       $50,108
                                 =======      =======       =======       =======
Held-to-maturity:
  U.S. Government obligations..  $10,974      $10,991       $10,268       $10,346

  Other........................    3,125        3,125         2,325         2,325
                                 -------      -------       -------       -------
                                 $14,099      $14,116       $12,593       $12,671
                                 =======      =======       =======       =======
</TABLE>


The contractual maturities of investments at December 31, 1996 were
as follows:

                                                      Estimated
                                          Amortized     Fair
(Amounts in thousands)                      Cost        Value
                                          ---------   ---------
Available-for-sale:
  Due in one year or less................  $13,531     $13,568

  Due after one year through five years..   45,119      45,050
                                           -------     -------
                                           $58,650     $58,618
                                           =======     =======

Held-to-maturity:
  Due in one year or less...............   $12,757     $12,785

  Due after one year through five years..    1,342       1,331
                                           -------     -------
                                           $14,099     $14,116
                                           =======     =======


                           40 of 193

<PAGE>

Accounts Receivable

Accounts receivable consisted of the following at December 31:


                                            1996        1995
  (Amounts in thousands)                  -------     -------
  Premiums receivable.................... $33,330     $30,886
  Allowance for retroactive
    billing adjustments..................  (5,112)     (2,941)
                                          -------     -------
  Premiums receivable, net...............  28,218      27,945

  Federal income tax refund receivable...               2,200
  Other..................................   4,889       2,801
                                          -------     -------
  Accounts receivable, net............... $33,107     $32,946
                                          =======     =======


Premiums receivable include as  of  December  31,  1996 and 1995 an
estimated $15.0 million for amounts due the Company with respect to
the prior operation of a governmental managed care program of which
$10.0 million was  recorded  as  Other  Income  for  the year ended
December 31, 1995.

Property and Equipment

Property and equipment  are  recorded  at  cost  and include assets
acquired through capital leases and improvements that significantly
add to the productive capacity  or  extend  the useful lives of the
assets.  Costs of maintenance and repairs are charged to expense as
incurred. Depreciation for financial reporting purposes is provided
on the straight-line method over  the estimated useful lives of the
assets.    The  costs  of  major  remodeling  and  improvements are
capitalized as leasehold improvements.   Leasehold improvements are
amortized using the straight-line  method  over  the shorter of the
remaining term of the applicable lease or the life of the asset.

Intangible Assets

Intangible assets consist primarily  of purchased computer software
and are amortized using  the  straight-line method over five years.
Accumulated amortization of intangible  assets at December 31, 1996
and 1995 is $1.8 million and $1.7 million, respectively.

Revenue Recognition

Premiums are recorded as revenue  in  the month for which enrollees
are entitled  to  health  care  services.    Premiums  collected in
advance are deferred.  A portion of premiums is subject to possible
retroactive adjustment.    Provision  has  been  made for estimated
retroactive adjustments to the extent  the probable outcome of such
adjustments can be determined.    Any other revenues are recognized
as services are rendered.

                           41 of 193

<PAGE>

Health Care Expense Recognition

The cost of health  care  services  is  expensed  in the period the
Company is obligated to provide  such services.  The Company's HMOs
arrange for the provision of health care services primarily through
capitation arrangements.  Under  capitation contracts, the HMO pays
the health care provider  a  fixed  amount  per member per month to
cover the payment of  all  or  most  medical services regardless of
utilization.      Where   the   Company   retains   the   financial
responsibility for specialist  referrals,  hospital utilization and
other health care  costs,  the  Company  establishes an accrual for
estimated  claims  payable  including  claims  reported  as  of the
balance sheet date and estimated (based upon utilization trends and
projections  of  historical  developments)  costs  of  health  care
services rendered but not  reported.   Estimated claims payable are
continually monitored and reviewed and,  as settlements are made or
accruals adjusted, differences are reflected in current operations.

Insurance

The Company's operating entities,  except  in North Carolina, South
Carolina and  California,  are  self-insured  for  risks on certain
medical and hospital claims incurred  by  their members.  The North
Carolina and  South  Carolina  HMOs  maintain  medical and hospital
claims reinsurance coverage with MLH.  The California HMO maintains
medical and hospital claims  reinsurance  coverage for its Medicaid
line  of  business  with  Health  Care  Assurance  Company  Limited
("HCAC"), a wholly-owned subsidiary of MHP.

In addition, the Company's  operating entities are self-insured for
medical malpractice claims  with  the  exception  of the California
HMO, which maintains malpractice coverage through HCAC.

Premium Deficiencies

Estimated future health care costs and maintenance expenses under a
group of  contracts  in  excess  of  estimated  future premiums and
reinsurance recoveries on those  contracts  are  recorded as a loss
when determinable.   No  such  deficiencies  exist  at December 31,
1996.

Net Income Per Common and Common Equivalent Share

The Company concluded the redemption of its Series A Stock on March
14, 1995 (the "Redemption  Date").    Holders of approximately 2.27
million shares  of  Series  A  Stock  converted  their  shares into
approximately 6.25 million  shares  of  the Company's Common Stock.
As a result of the  redemption  of  the  Series A Stock the Company
paid no preferred  stock  dividends  in  1995, and, accordingly, no
consideration  is  given  to   preferred  stock  dividends  in  the
calculation of earnings per share  for the years ended December 31,
1995 and 1996.

                           42 of 193

<PAGE>

Primary earnings per  share  are  computed  by  dividing net income
available to common shareholders by  the weighted average number of
common shares outstanding,  after  giving  effect  to stock options
with an exercise price less  than  the average market price for the
period.  Common  shares  issued  upon  the  conversion of preferred
stock have been included in  the  weighted average number of common
shares outstanding subsequent to the conversion date.

Fully diluted  earnings  per  share  are  computed  by dividing net
income by the weighted average number of common shares outstanding,
after giving effect to  stock  options  with an exercise price less
than the market price at the  end  of the period (or average market
price if use of that price  results in greater dilution) and shares
assumed to be  issued  upon  conversion  of the Company's preferred
stock.  Common shares issued upon the conversion of preferred stock
have been included in the  weighted average number of common shares
outstanding and the preferred  shares  have  been excluded from the
weighted average  number  of  common  equivalent shares outstanding
subsequent to the conversion date.

Fully diluted earnings per share  are reported only when the amount
calculated is less than the  primary  earnings  per share.  For the
year ended  December  31,  1994  fully  diluted  earnings per share
exceed the primary earnings  per  share (i.e., the calculations are
"anti-dilutive") so  primary  earnings  per  share  are reported as
fully diluted.

Stock Options

In October  1995,  SFAS  No.  123  "Accounting  for  Stock  - Based
Compensation"  was  issued   which   provides   an  alternative  to
Accounting Principles Board ("APB")  Opinion No. 25 "Accounting for
Stock Issued to Employees".  SFAS  No. 123 encourages, but does not
require, that  compensation  expense  for  grants  of  stock, stock
options and other equity instruments  to  employees be based on the
fair value of such instrument.  The Statement also allows companies
to continue to  measure  compensation  expense  using the intrinsic
value method prescribed by  APB  Opinion  No.  25.  The Company has
elected to continue with the intrinsic value based method.

With respect to stock options granted at an exercise price which is
less  than  the  fair  market  value  on  the  date  of  grant, the
difference between the option  exercise  price  and market value at
date of grant is charged to  operations over the period the options
vest.   Income  tax  benefits  attributable  to  stock  options are
credited to Additional Paid-in Capital when exercised.

Restrictions on Fund Transfers

Certain of  the  Company's  operating  subsidiaries  are subject to
state regulations which  require  compliance with certain statutory
deposit, dividend distribution and net  worth requirements.  To the
extent  the   operating   subsidiaries   must   comply  with  these
regulations,  they  may  not  have  the  financial  flexibility  to
transfer funds to MHP.  MHP's proportionate share of net assets

                           43 of 193

<PAGE>

(after inter-company eliminations) which, at December 31, 1996, may
not be transferred to  MHP  by  subsidiaries  in the form of loans,
advances or cash dividends without the  consent of a third party is
referred to as "Restricted  Net  Assets".  Restricted Net Assets of
these operating subsidiaries  were  $34.9  million  at December 31,
1996, with deposit  requirements  and  limitations imposed by state
regulations on  the  distribution  of  dividends representing $13.0
million  and  $12.6   million   of   the   Restricted  Net  Assets,
respectively, and net worth  requirements  in excess of deposit and
dividend limitations representing the  remaining $9.3 million.  The
Company's total Restricted  Net  Assets  at  December 31, 1996 were
$35.1 million.

Concentrations of Credit Risk

Financial instruments  which  potentially  subject  the  Company to
concentrations of credit risk  consist  primarily of investments in
marketable  securities  and  premiums  receivable.    The Company's
investments  in  marketable  securities  are  managed  by  internal
investment managers within the  guidelines established by the Board
of Directors, which, as a matter of policy, limit the amounts which
may be invested in any  one  issuer.  Concentrations of credit risk
with respect to premiums  receivable  are  limited due to the large
number of employer groups  comprising  the Company's customer base.
As of December 31, 1996 management believes that the Company had no
significant concentrations of credit risk.

NOTE 3 - PAYABLE TO DISBURSING AGENT

On December 5, 1990 (the "Effective Date") the Company emerged from
protection under Chapter 11 pursuant to the Company's joint plan of
reorganization,  as  modified  (the  "Reorganization  Plan").   The
Reorganization Plan provided that on  December 31, 1991 and 1992 or
within  90  days  thereafter,  the  Company  would  make additional
distributions, not to exceed $20.0  million in the aggregate, in an
amount equal to its then  consolidated  net worth (as determined in
the Company's audited consolidated  financial statements) less $2.0
million (the "Consolidated Net  Worth  Distribution").  Pursuant to
the  Reorganization  Plan,  40%   of  the  Consolidated  Net  Worth
Distribution was  to  be  distributed  ratably  to  the  holders of
certain  allowed  claims  in  accordance  with  the  terms  of  the
Reorganization Plan  while  the  remaining  60%  was  to be applied
ratably  against  mandatory  redemptions  of  certain  Senior Notes
issued as part of the Reorganization Plan.

In the first quarter of 1992  MHP issued 2,400,000 shares of Series
A Cumulative Convertible  Preferred  Stock  (the  "Series A Stock")
(see Note 6) and redeemed the  Senior  Notes.  The Company does not
believe that    the  Reorganization  Plan  contemplated  either the
issuance of preferred stock or  the  redemption of the Senior Notes
and,  accordingly,  believes   that   the  Consolidated  Net  Worth
Distribution  required  by   the   Reorganization  Plan  should  be
calculated  as  if  the  sale  of  Series  A  Stock  had  not  been
consummated and the Senior Notes had not been redeemed. The Company
thus determined the December 31, 1992 Consolidated Net Worth

                           44 of 193

<PAGE>

Distribution amount to be approximately  $971,000.  This amount was
tendered  for   distribution   to   certain   creditors  under  the
Reorganization Plan.  In  addition,  the  Company believes that any
Consolidated Net Worth Distribution  which under the Reorganization
Plan was to be utilized to redeem the Senior Notes is no longer due
as the Senior Notes have been fully redeemed.

Notwithstanding the foregoing, the Company elected to accrue in its
consolidated financial statements for the first quarter of 1992 the
maximum potential liability  pending  clarification of this matter.
Since the second quarter  of  1992,  the  Company from time to time
engaged in correspondence  and  discussions with representatives of
the creditors regarding  the  application  of  the Consolidated Net
Worth Distribution provision  of  the  Reorganization  Plan and the
amount that may ultimately be payable, if any; however, the Company
has not had any substantive  discussion with representatives of the
creditors  on  this  matter  since  April  1995.    Based  upon the
foregoing, the Company has reassessed its estimate of the potential
liability regarding this  provision  of  the Plan, and accordingly,
during the fourth quarter of 1996 the Company reduced the estimated
distribution payable from $6.2  million  to $1.0 million. This $5.2
million  credit  resulting  from   a  reduction  in  the  estimated
distribution  payable  has  been   included  in  Other  Income  for
financial reporting purposes.   The  amount  that may be ultimately
payable pursuant to  this  Reorganization  Plan  provision, if any,
could be different than the amount accrued as of December 31, 1996.
Any Consolidated Net  Worth  Distribution  would  be  made from the
Company's available cash.

NOTE 4 - LITIGATION

The Company is involved in  litigation arising in the normal course
of business, which, in the  opinion  of management, will not have a
material adverse  effect  on  the  Company's consolidated financial
position or results of operations.

NOTE 5 - COMMITMENTS AND CONTINGENCIES

Leases

The Company has operating leases, some of which provide for initial
free rent and all of  which  provide for subsequent rent increases.
Rental expense is recognized  on  a straight-line basis with rental
expense of $2.4 million, $2.5 million and $2.7 million reported for
the years ended  December  31,  1996,  1995 and 1994, respectively.
Sublease rental revenue of $72,000 and $251,000 is reported for the
years ended December 31, 1995 and 1994, respectively.

Assets held under capital leases  at  December 31, 1996 and 1995 of
$1.0 million and $1.4  million,  respectively, (net of $577,000 and
$253,000, respectively, of  accumulated amortization) are comprised
primarily of equipment  leases.    Amortization expense for capital
leases is included in depreciation expense.

                           45 of 193

<PAGE>

Future  minimum  lease  commitments  for  noncancelable  leases  at
December 31, 1996 were as follows:


                                        Operating  Capitalized
                                         Leases      Leases
         (Amounts in thousands)         ---------  -----------
         1997..........................  $2,258       $438
         1998..........................   2,287        316
         1999..........................   1,860         18
         2000..........................     852
         2001..........................     635
         Thereafter....................   1,130
                                         ------       ----
         Total minimum
           obligations.................  $9,022        772
                                         ======

         Less current
           obligations.................                438
         Long-term                                    ----
           obligations.................               $334
                                                      ====


NOTE 6 - CAPITAL STOCK

On March 9,  1992  the  shareholders  voted  to amend MHP's current
Restated Certificate of  Incorporation  to  increase the authorized
Capital Stock of  the  Company  from  18.0  million  shares to 45.0
million shares through: (i) an increase in the amount of authorized
Common Stock of  the  Company,  par  value  $.01, from 18.0 million
shares to 40.0 million  shares,  and  (ii) the authorization of 5.0
million shares of Preferred  Stock,  par  value  $.01, of which 2.5
million shares were designated the Series A Stock.

Preferred Stock

On February 13, 1995 the Company announced that it would redeem all
of its 2.29 million  outstanding  shares  of  the Series A Stock on
March 14, 1995.  Holders of  Series A Stock were entitled to either
have their shares redeemed  by  the  Company  at $25.4625 per share
(the "Redemption Price"), which  represents the redemption price of
$25.00 per share plus  accrued  and  unpaid dividends of $.4625 per
share, or convert their Series  A  Stock  into 2.7548 shares of the
Company's Common Stock for each  share of Series A Stock converted.
Holders of approximately  2.27  million  shares  of  Series A Stock
converted their shares  into  approximately  6.25 million shares of
Common Stock.  As of March 14, 1995, the remaining 21,000 shares of
Series A Stock are no longer   deemed to be outstanding and holders
of Series A Stock  certificates  were  entitled to receive only the
Redemption Price without additional interest thereon upon surrender
of  the  Series  A  Stock  certificates  properly  endorsed  to the
redemption agent, American Stock Transfer & Trust Company.

                           46 of 193

<PAGE>

Common Stock

The Company is authorized to issue  40.0 million shares of $.01 par
value Common Stock.    Under  the  Reorganization Plan 10.0 million
shares of the Company's Common Stock were issued for the benefit of
holders  of  allowed  claims,  interest  and  equity  claims.    An
additional 6.6 million shares  were  issued  upon the conversion of
Series A Stock in 1994 and  1995, and .4 million shares were issued
in connection with the exercise  of warrants issued pursuant to the
Reorganization Plan.  As  of  December  31, 1996 approximately 17.6
million shares of the Company's Common Stock were outstanding.  The
Certificate of Incorporation of  the Company prohibits the issuance
of certain non-voting equity  securities  as required by the United
States Bankruptcy Code.

Stock Option Plans

Pursuant to the Reorganization  Plan,  Mr.  Peter J. Ratican, Chief
Executive Officer and President, and  Mr. Eugene L. Froelich, Chief
Financial  Officer  and  Executive  Vice  President  -  Finance and
Administration ("Senior Management")  each  received stock options,
which are all currently exercisable and which expire on December 5,
2000, to purchase up to 277,778  shares  of Common Stock at a price
of $6.54 per option  share.    As  of  January 1, 1992, the Company
entered into employment agreements  with  Senior Management.  Under
the terms of  these  employment  agreements,  each member of Senior
Management received a grant of  stock options on February 25, 1992,
which are all currently  exercisable  and  which expire on February
25, 1997, to purchase up  to  150,000  shares  of Common Stock at a
price of $8.00 per option share.

In December 1990, the Company  approved  the 1990 Stock Option Plan
(the "1990 Plan").  Under the  terms  of the 1990 Plan, as amended,
the Company may issue up  to an aggregate of 1,000,000 nonqualified
stock options to directors, officers  and other employees.  In July
of 1995, the Company approved the 1995 Stock Option Plan (the "1995
Plan"). Under the terms of the  1995 Plan, the Company may issue up
to  an  aggregate  of  1,000,000  nonqualified  or  incentive stock
options to directors, officers and other employees.  Under the 1990
Plan and  1995  Plan,  stock  options  granted  to  date  have been
nonqualified stock options which expire no later than 10 years from
the date of grant.   Stock  options  granted to date under the 1990
Plan and 1995 Plan have been at  an exercise price equal to 100% of
the fair market value of the stock at the date of grant.

In July  1996,  the  Company  approved  the  Outside Directors 1996
Formula Stock Option Plan (the "Formula Plan").  Under the terms of
the Formula Plan,  the  Company  may  issue  up  to an aggregate of
125,000  nonqualified  stock  options  to  directors  who  are  not
employees or officers of the Company (the "Outside Directors").  On
the date  the  Formula  Plan  was  adopted,  each  Outside Director
received a grant  of  stock  options  to  purchase  5,000 shares of
Common Stock.  Commencing  January  2,  1997,  and each January 2nd
thereafter, each Outside  Director  then  serving  on  the Board of
Directors shall receive a grant of stock options to purchase 5,000

                           47 of 193

<PAGE>

shares of Common Stock.  Options granted under the Formula Plan are
at an exercise price equal to 100%  of the fair market value of the
stock at the date of grant, vest  six months from the date of grant
and expire 10 years from the date of grant.

In July 1996, the Company approved the Senior Executives 1996 Stock
Option Plan (the "Senior Executives Plan").  Under the terms of the
Senior Executives Plan, the Company may issue up to an aggregate of
700,000 nonqualified stock options  to  the Chief Executive Officer
and  Chief   Financial   Officer   (the   "Senior  Executives"  and
individually the  "Senior  Executive").    On  the  date the Senior
Executives Plan was adopted, each Senior Executive received a grant
of  stock  options  to  purchase  70,000  shares  of  Common Stock.
Commencing January 1, 1997, and each January 1st thereafter through
and including January 1, 2000,  each Senior Executive then employed
by the Company shall receive  a  grant of stock options to purchase
70,000 shares of Common  Stock.    Options granted under the Senior
Executives Plan are at an exercise  price equal to 100% of the fair
market value of the stock  at  the  date of grant, vest immediately
and expire 10 years from the date of grant.

A summary  of  the  Company's  stock  option  activity, and related
information for the years ended December 31 follows:


<TABLE>
<CAPTION>
                                           1994                         1995                         1996
                                 --------------------------   --------------------------   --------------------------
                                 Options   Weighted-Average   Options   Weighted-Average   Options   Weighted-Average
                                  (000)     Exercise Price     (000)     Exercise Price     (000)     Exercise Price
                                 -------   ----------------   -------   ----------------   -------   ----------------

<S>                             <C>       <C>                <C>       <C>                <C>       <C>
Outstanding beginning of year     1,598        $ 7.80          1,716        $ 8.45          1,700        $10.56
Granted (a)                         216         13.22            219         25.53            538         16.09
Exercised                           (88)         8.15           (189)         8.58           (145)         9.76
Forfeited                           (10)         9.40            (46)        11.38            (35)        19.45
Outstanding end of year           1,716          8.45          1,700         10.56          2,058         11.91
Exercisable end of year           1,383          7.60          1,316          7.83          1,503          9.47


(a) The weighted-average fair value of options granted during 1995 and 1996 was $11.29 and $7.47, respectively.
</TABLE>


The following  table  summarizes  information  about  stock options
outstanding at December 31, 1996:
<TABLE>
<CAPTION>


<S>              <C>           <C>                <C>                <C>            <C>
                                  Options Outstanding                        Options Exercisable
                  --------------------------------------------------- -------------------------------
                    Number      Weighted-Average                        Number
                  Outstanding      Remaining                          Exercisable
   Range of       at 12/31/96   Contractual Life   Weighted-Average   at 12/31/96    Weighted-Average
Exercise Prices      (000)       (# of Months)     Exercise Price        (000)        Exercise Price
---------------   -----------   ----------------   ----------------   -----------    ----------------
$ 6.40 - $12.75      1,179            31               $ 7.54            1,179           $ 7.54
$13.25 - $19.13        594            93                14.23              262            14.20
$21.25 - $28.38        285           111                25.21               62            26.50
                     -----                                               -----
$ 6.40 - $28.38      2,058            60                11.91            1,503             9.47
                     =====                                               =====
</TABLE>

                           48 of 193

<PAGE>

The Company has elected to follow  APB Opinion No. 25 and related
Interpretations in  accounting  for  its  employee  stock options
because,  as  discussed   below,   the   alternative  fair  value
accounting provided for under SFAS No. 123 requires use of option
valuation models  that  were  not  developed  for  use in valuing
employee stock options.   Under  APB  Opinion No. 25, because the
exercise price of the Company's employee stock options equals the
market price of the  underlying  stock  on  the date of grant, no
compensation expense is recognized.

Pro forma information regarding net income and earnings per share
is required by SFAS No.  123,  and  has been determined as if the
Company had accounted for  its  employee  stock options under the
fair value method of that  Statement.    The fair value for these
options was estimated at the  date of grant using a Black-Scholes
option  pricing   model   with   the  following  weighted-average
assumptions for 1995  and  1996, respectively: volatility factors
of the expected market price of the Company's common stock of .41
and .43; a weighted-average expected  life  of the options of 4.8
years and 5.0 years; risk-free interest rate of 6.0% and dividend
yield of 0%.

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions and are  fully  transferable.    In addition, option
valuation  models  require   the   input   of  highly  subjective
assumptions  including  the   expected  stock  price  volatility.
Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because
changes in the subjective input assumptions can materially affect
the fair value  estimate,  in  management's opinion, the existing
models do not necessarily  provide  a  reliable single measure of
the fair value of its employee stock options.

Pro forma  disclosures  required  by  SFAS  No.  123  include the
effects of all stock  option  awards  granted by the Company from
January 1, 1995 through  December  31,  1996.  During the initial
phase-in period,  the  effects  of  applying  this  Statement for
generating  pro  forma   disclosures   are   not   likely  to  be
representative of the effects on  pro forma net income for future
years, for example, because  options  may vest over several years
and additional awards generally are made each year.  For purposes
of pro forma disclosures, the estimated fair value of the options
is amortized to expense  over  the  options' vesting period.  The
Company's pro forma information is as follows for the years ended
December  31  (in  thousands   except   for  earnings  per  share
information):
                                 1995      1996
                                -------   -------
Pro forma net income            $27,623   $16,512

Pro forma earnings per
common share:
  Primary                       $  1.63   $   .90
  Fully diluted                 $  1.50   $   .89

                           49 of 193

<PAGE>

Restricted Stock

On February  27,  1995  the  Board  of  Directors  of the Company
approved Restricted Stock Grant Agreements awarding 65,000 shares
of  Restricted  Stock  to   each   member  of  Senior  Management
(individually the "Executive").   The Restricted Stock is subject
to complete forfeiture should the  Executive to which it has been
awarded be terminated  prior  to  February  27,  1998.   Upon the
Executive remaining in the employ of the Company through February
27, 1998  the  Restricted  Stock  becomes  fully  vested.   Under
certain defined circumstances  involving  a  change in control of
the Company the Restricted Stock will vest in full immediately.

The Company  has  measured  the  total  compensation  cost of the
Restricted Stock awards as the  excess of the quoted market price
of similar but unrestricted  shares  of  stock  at the award date
over the purchase price, if  any,  of  the Restricted Stock.  The
quoted market price of  shares  of  the Company's Common Stock at
the date of  grant  was  $16.125,  and  the  Restricted Stock was
awarded to the Executives  at  no  cost.   The total compensation
cost of the Restricted Stock is $2,096,000 and is being amortized
over the three year vesting period.

Warrants

In accordance with  the  Reorganization  Plan, the Company issued
warrants (the  "Warrants"),  entitling  the  holders  thereof, to
purchase for $9.98 per Warrant,  in the aggregate, 555,555 shares
of Common Stock.  In  June  1994, the Company issued a redemption
notice on  the  Warrants  whereby  warrantholders  who  wished to
exercise their Warrant  had  to  do  so  by  July  29, 1994.  Any
warrantholder  who  did  not  exercise  his  or  her  Warrant  by
tendering the Warrant certificate  for redemption has received or
is entitled to receive the  redemption price of $.05 per Warrant.
A total  of  420,178  Warrants  were  exercised  and  the Company
realized  net  proceeds   of   approximately  $4.2  million.  The
remaining 135,377 Warrants were redeemed by the Company.

                           50 of 193

<PAGE>

NOTE 7 - INCOME TAXES

The benefit  for  income  taxes  at  December  31  consisted of the
following:


                                  1996      1995      1994
(Amounts in thousands)          -------   -------   -------
Current:
  Federal...................... $   518   $   236   $   219
  State........................     215       139       123
                                -------   -------   -------
                                    733       375       342
                                -------   -------   -------
Deferred:
  Federal......................  (3,400)   (3,400)   (3,400)
  State........................    (600)     (600)     (600)
                                -------   -------   -------
                                 (4,000)   (4,000)   (4,000)
                                -------   -------   -------
Benefit for income taxes....... $(3,267)  $(3,625)  $(3,658)
                                =======   =======   =======


The  federal  and  state  deferred  tax  liabilities  (assets)  are
comprised of the following at December 31:


                                  1996        1995        1994
(Amounts in thousands)         ----------  ----------  ----------
Loss carryforwards...........  $ (97,444)  $(102,721)  $(111,060)
Depreciation.................     (1,371)     (1,316)     (1,133)
Other........................     (3,075)     (2,568)     (2,465)
                               ---------   ---------   ---------

Gross deferred tax assets....   (101,890)   (106,605)   (114,658)
                               ---------   ---------   ---------

Deferred tax assets valuation
  allowance.................      83,890      92,605     104,658
                               ---------   ---------   ---------

Deferred tax asset..........   $ (18,000)  $ (14,000)  $ (10,000)
                               =========   =========   =========

                           51 of 193

<PAGE>

The differences between the benefit for income taxes at the federal
statutory rate of 34% and that shown in the Consolidated Statements
of  Operations  are  summarized  as  follows  for  the  years ended
December 31:


                                       1996      1995      1994
(Amounts in thousands)               -------   -------   -------
Tax provision at statutory rate..... $ 5,494   $ 8,177   $ 3,290
State income taxes..................     215       139       123
Exercise of nonqualified stock
  options...........................    (809)     (577)
Benefit of NOL carryforwards........  (4,167)   (7,364)   (3,071)
Anticipation of future benefit of
  NOLs..............................  (4,000)   (4,000)   (4,000)
                                     -------   -------   -------

Benefit for income taxes............ $(3,267)  $(3,625)  $(3,658)
                                     =======   =======   =======


Upon the Effective  Date  of  the  Reorganization Plan, the Company
experienced  a  "change   of   ownership"  pursuant  to  applicable
provisions of the Internal Revenue  Code  (the "IRC").  As a result
of the ownership  change,  the  Company's  pre-change net operating
loss  carryforwards  ("NOLs")  of  approximately  $325  million are
subject to limitation under provisions  of  Section 382 of the IRC.
These NOLs are  subject  to  a  fifteen  year  carryover period and
expire for federal income  tax  purposes  in the years 2002 through
2005.   From  the  Effective  Date  through  December  31, 1995 the
Company has recognized  for  financial statement reporting purposes
an annual limitation for its NOLs of approximately $6.3 million per
year.  In 1996,  the  Company  determined its annual limitation for
its pre-change NOLs is $9.2 million per year or an aggregate amount
of $139  million  over  the  carryover  period.    The Company also
determined during 1996 that  $182  million of additional limitation
is available for income tax  return purposes under other provisions
of Section 382  of  the  IRC.    Accordingly,  the Company believes
approximately $321 million  of  the  total  pre-change NOLs of $325
million will be available  for  utilization  for federal income tax
return purposes  over  the  carryover  period.    In  the event the
current limitation amount  is  not  fully  utilized, the Company is
allowed to carryover  such  amount  to  subsequent years during the
carryover period.  From December  5, 1990 through December 31, 1996
the Company has  utilized  approximately  $55  million  of the pre-
change  NOLs  for  federal  income  tax  return  purposes  and  has
recognized  approximately  $104  million  of  pre-change  NOLs  for
financial statement reporting purposes.    The Company is unable to
quantify to what extent, if any,  the  Company may be able to fully
utilize its remaining  pre-change  NOLs  prior to their expiration.
Should the Company experience  a  second "change of ownership", the
limitation  under  Section  382  of   the  IRC  on  NOLs  would  be
recalculated.

                           52 of 193

<PAGE>

SFAS No. 109 "Accounting  for  Income  Taxes" requires that the tax
benefit of such NOLs be  recorded  as  an  asset to the extent that
management assesses the utilization of  such NOLs to be more likely
than not.  Management has  estimated, based on the Company's recent
history of operating results  and  its expectations for the future,
that future taxable income of the Company will more likely than not
be sufficient to utilize a  minimum of approximately $45 million of
NOLs.   Accordingly,  the  Company  recorded  an  increase  of $4.0
million in 1996  to  its  deferred  tax  asset,  from $14.0 million
recorded  as  of  December  31,  1995,  resulting  in  an aggregate
deferred tax asset of  $18.0  million  recorded  as of December 31,
1996 for the recognition of anticipated future utilization of NOLs.

NOTE 8 - EMPLOYEE BENEFIT PLANS

The  Company  adopted  the  Maxicare  Health  Plans,  Inc.  Savings
Incentive Plan (the "Savings Plan")  in  January 1985.  The Savings
Plan is a defined contribution  401(k) profit sharing plan covering
employees  of  the  Company  who  have  satisfied  the  eligibility
requirements.   The  primary  eligibility  requirement  is  that an
employee must have completed one year of eligible service.

The cost of the Savings Plan  is shared by the participants and the
Company.  Eligible  employees  may  defer  from  1%  to 15% of base
compensation on  a  before-tax  basis  in  accordance  with Section
401(k) of the Internal Revenue  Code.    The Savings Plan calls for
the Company to match up to  3% of total compensation, not to exceed
the employee's contribution.    The Company's contributions totaled
$340,000, $262,000 and $289,000  for  the  years ended December 31,
1996, 1995 and 1994, respectively.

Effective January 1, 1997  the  Company adopted the Maxicare Health
Plans, Inc.  Supplemental  Executive  Retirement  Plan (the "SERP")
which covers key executives as selected by the Board.  Benefits are
based on years  of  service  and  average  compensation in the last
three years of employment.


                           53 of 193

<PAGE>

Quarterly Results of Operations (Unaudited)

The  following  is  a  tabulation   of  the  quarterly  results  of
operations for the years ended December 31:
<TABLE>
<CAPTION>

(Amounts in thousands,                                  Three months ended,
except per share data)                     ---------------------------------------------
---------------------                      March 31     June 30     Sept 30     Dec 31
                                           ---------   ---------   ---------   ---------

1996
----
<S>                                       <C>         <C>         <C>         <C>

Revenues                                   $131,766     $134,573    $140,794   $155,632

Income (loss) from operations              $  4,184     $   (993)   $  3,453   $  3,083

Net income (1)                             $  5,736     $    523    $  5,025   $  8,141

Net income available to common
  shareholders                             $  5,736     $    523    $  5,025   $  8,141

Net income per common share:
    Primary                                $    .31     $    .03    $    .27   $    .44
    Fully Diluted                          $    .31     $    .03    $    .27   $    .44

1995
----

Revenues                                   $112,355    $113,692    $119,879    $131,418

Income from operations                     $  4,288    $  4,230    $  4,445    $  4,847

Net income (1)                             $  4,688    $  4,897    $  7,468    $ 10,623

Net income available to common
  shareholders                             $  4,688    $  4,897    $  7,468    $ 10,623

Net income per common share:
    Primary                                $    .35    $    .27    $    .41    $    .58
    Fully Diluted                          $    .26    $    .27    $    .41    $    .58


(1) Includes $3.4 million and  $4.0  million,  respectively,  of  income  tax benefits from the
    recording of a deferred tax asset in the fourth quarter of both 1996 and 1995 (see "Item 8.
    Financial Statements  and  Supplementary  Data  -  Note  6  to  the  Company's Consolidated
    Financial Statements").
</TABLE>

                           54 of 193

<PAGE>

Item 9.  Changes in and Disagreements with Accountants on
         ------------------------------------------------
         Accounting and Financial Disclosures
         ------------------------------------

None.

                           55 of 193

<PAGE>

                             PART III
                             --------


Item 10. Directors, Executive Officers, Promoters and Control
         ----------------------------------------------------
         Persons of the Registrant
         -------------------------

The information set forth in  the  table, the notes thereto and the
paragraphs thereunder, in Part I,  Item  1. of this Form 10-K under
the caption "Directors and Executive Officers of the Registrant" is
incorporated herein by reference.


                           56 of 193

<PAGE>

Item 11. Executive Compensation
         ----------------------

Shown below  is  information  concerning  the  annual and long-term
compensation for services in all  capacities to the Company for the
years ended December 31, 1996, 1995  and 1994, of those persons who
were, at December 31, 1996 (i) the chief executive officer and (ii)
the other four most  highly  compensated  executive officers of the
Company (collectively the "Named Officers"):


                        Summary Compensation Table

<TABLE>
<CAPTION>

                                                                                 Long-Term
                                            Annual Compensation                 Compensation
                                    ----------------------------------     ----------------------
                                                                           Stock       Restricted
                                              Reorganization               Options       Stock
                                                  Plan                     Awards        Awards      All Other
Name and Principal Position  Year    Salary     Bonus(1)      Bonus(2)      (#)           (3)      Compensation(4)
---------------------------  ----   --------  --------------  --------    --------     ----------  ---------------
<S>                         <C>    <C>       <C>             <C>         <C>          <C>         <C>
Peter J. Ratican             1996   $481,250                  $146,872     70,000                    $4,500
Chairman of the Board        1995   $425,000    $25,278       $356,862                 $1,048,125    $4,500
of Directors, Chief          1994   $425,000                                                         $5,539
Executive Officer and
President

Eugene L. Froelich           1996   $381,250                  $146,872     70,000                    $4,500
Executive Vice President -   1995   $325,000    $25,278       $356,862                 $1,048,125    $4,500
Finance and Administration,  1994   $325,000                                                         $5,539
Chief Financial Officer
and Director

Richard A. Link              1996   $215,000                               10,000                    $4,500
Senior Vice President -      1995   $205,000                               10,000                    $4,500
Accounting and Chief         1994   $197,500                                5,000                    $4,580
Accounting Officer

Alan D. Bloom                1996   $213,000                                5,000                    $4,500
Senior Vice President,       1995   $208,000                                                         $4,500
Secretary and General        1994   $203,000                                7,500                    $4,697
Counsel

Aivars L. Jerumanis          1996   $195,000                                5,000                    $4,500
Senior Vice President -      1995   $190,000                                5,000                    $4,500
Management Information       1994   $187,000                                5,000                    $5,250
Systems and Chief
Information Officer


(1)  These amounts are bonuses payable pursuant to  the Reorganization Plan and were paid from funds
     held by the Disbursing Agent in a  segregated  account  and  were not paid out of the Company's
     available cash.

(2)  These amounts include $146,872  and  $256,862  paid  in  February  1997 and 1996, respectively,
     pursuant to employment agreements entered into by  the Company with Peter J. Ratican and Eugene
     L. Froelich ("Senior Management").  These employment agreements call for the payment of a bonus
     to Senior Management based  upon  the  Company's  annual  pre-tax earnings before extraordinary
     items.  The 1995 amount also includes  a  $100,000  bonus paid to Senior Management in February
     1995 as determined by the Company's Board of Directors.

                           57 of 193

<PAGE>

(3)  These amounts represent the fair market value  of  65,000 shares of Restricted Stock awarded to
     each of the Named Officers on February  27,  1995,  based  upon the closing market price of the
     Company's Common Stock on that date  ($16.125).    The  Restricted Stock is subject to complete
     forfeiture should the  Named  Officer's  employment  with  the  Company  be terminated prior to
     February 27, 1998.  Upon  the  Named  Officer  remaining  in  the employ of the Company through
     February  27,  1998,  the  Restricted  Stock  becomes  fully  vested.    Under  certain defined
     circumstances involving a change in control  of  the  Company the Restricted Stock will vest in
     full immediately.  Based upon the closing  price  of the Company's Common Stock at December 31,
     1996 ($22.25), the Restricted Stock awarded to  each  Named  Officer had a fair market value of
     $1,446,250 at that date.

(4)  These amounts include contributions made by  the  Company  on behalf of the Named Officer under
     the Company's 401(k) Savings Incentive Plan.

</TABLE>


Option Grants
-------------

Shown below  is  further  information  on  grants  of stock options
pursuant to the Senior Executives  Plan  and 1995 Stock Option Plan
during the year  ended  December  31,  1996,  to the Named Officers
which are reflected in the Summary Compensation Table.

<TABLE>
<CAPTION>

                         Number of    Percentage of                                      Potential Realizable
                         Securities   Total Options                                        Value at Assumed
                         Underlying    Granted to     Exercise or                        Annual Rates of Stock
                         Options      Employees in    Base Price        Expiration        Price Appreciation
       Name              Granted (1)  Fiscal 1996     ($/share)(2)         Date           for Option Term (3)
-------------------      -----------  -------------   ------------     -------------     ---------------------
                                                                                            5%          10%
                                                                                         --------   ----------
<S>                     <C>          <C>             <C>            <C>                 <C>           <C>
Peter J. Ratican           70,000        12.9%         $14.75          July 26, 2006     $649,334   $1,645,539
Eugene L. Froelich         70,000        12.9%         $14.75          July 26, 2006     $649,334   $1,645,539
Richard A. Link            10,000         1.8%         $14.25          July 23, 2006     $ 89,617   $  227,108
Alan D. Bloom               5,000          .9%         $14.25          July 23, 2006     $ 44,809   $  113,554
Aivars L. Jerumanis         5,000          .9%         $14.25          July 23, 2006     $ 44,809   $  113,554


(1)  The options under the Senior Executives Plan  were  granted  as  of July 26, 1996 and vest upon
     date of grant.  The options under the 1995  Stock  Option Plan were granted as of July 23, 1996
     and vest in one-third installments on the first,  second and third anniversaries of the date of
     grant.  If the grantee's employment  is  terminated  under  certain circumstances or there is a
     restructuring of the Company (as set forth  in  the option agreement) the options granted under
     the 1995 Stock Option Plan would become immediately exercisable.

(2)  The option exercise price is subject to adjustment  in  the event of a stock split or dividend,
     recapitalization or certain other events.

(3)  The actual value, if any, the Named Officer may  realize will depend on the excess of the stock
     price over the exercise  price  on  the  date  the  option  is  exercised,  so that there is no
     assurance the value realized by the Named Officer will be at or near the value estimated.  This
     amount is net of the option exercise price.
</TABLE>

                           58 of 193

<PAGE>

Option Exercises and Fiscal Year-End Values
-------------------------------------------

Shown below is information with  respect to the unexercised options
to purchase the Company's Common  Stock  granted in fiscal 1996 and
prior years  under  employment  agreements,  the  1990 Stock Option
Plan, the 1995 Stock Option Plan  and the Senior Executives Plan to
the Named Officers and held by them at December 31, 1996.

<TABLE>
<CAPTION>

                         Number of Unexercised          Value of Unexercised
                           Options Held At             In-the-Money Options At
                          December 31, 1996             December 31, 1996 (1)
                       -------------------------     -------------------------
      Name             Exercisable Unexercisable     Exercisable Unexercisable
-------------------    ----------- -------------     ----------- -------------
<S>                   <C>                           <C>         <C>
Peter J. Ratican         497,778                     $7,026,392
Eugene L. Froelich       497,778                     $7,026,392
Richard A. Link           61,666      18,334         $  805,597     $95,003
Alan D. Bloom              5,000       7,500         $   54,050     $62,500
Aivars L. Jerumanis       29,999      10,001         $  378,097     $55,003


(1) Based on the closing price on the NASDAQ-NMS on that date ($22.25), net of the option exercise price.
</TABLE>


Shown below is information with  respect to stock options exercised
by Named Officers in 1996.

<TABLE>
<CAPTION>

                                                              Number of                  Value of
                           Number of                    Securities Underlying        Unexercised in-the
                            Shares                       Unexercised Options          Money Options at
                          Acquired on     Value          at December 31, 1996        December 31, 1996
       Name                Exercise      Realized      Exercisable/Unexercisable  Exercisable/Unexercisable
-------------------       -----------    --------      -------------------------  -------------------------
<S>                      <C>           <C>            <C>                        <C>
Richard A. Link             10,000       $220,125            61,666 / 18,334         $805,597 / $95,003
Alan D. Bloom               17,500       $344,038             5,000 /  7,500         $ 54,050 / $62,500
</TABLE>


Employment Agreements
---------------------

As  of  January  1,  1992,   the  Company  entered  into  five-year
employment agreements with Peter J.  Ratican and Eugene L. Froelich
("Senior Management") which  agreements  were amended by amendments
dated February 27, 1995 (the "Employment Agreements").  As of April
1, 1996, and as amended  on  February 11, 1997, the Company entered
into new five-year employment agreements  with Peter J. Ratican and
Eugene L. Froelich (the  "Restated  Employment Agreements").  These
Restated Employment Agreements provide for annual base compensation
of $500,000 for Mr. Ratican  and $400,000 for Mr. Froelich, subject
to increases and bonuses, as  may  be determined by the Board based
on annual reviews.  The Restated Employment Agreements provide that
upon the termination of either member of Senior Management by the

                           59 of 193

<PAGE>

Company without Cause or reasons  other than death or incapacity or
the voluntary termination by either member of Senior Management for
certain reasons as set forth in the Restated Employment Agreements,
the terminated member will  be  entitled  to  receive (i) a payment
equal to the balance of  the terminated member's annual base salary
which would have been paid  over  the  remainder of the term of the
Restated Employment Agreement; (ii) an additional one year's annual
base salary; (iii) payment  of  any performance bonus amounts which
would have otherwise been payable over the remainder of the term of
the Restated Employment  Agreement;  (iv)  immediate vesting of all
stock options; and (v) the continuation of the right to participate
in any profit sharing,  bonus,  stock option, pension, life, health
and accident insurance, or other employee benefit plans including a
car allowance through March 31, 2001.  Cause is defined as: (i) the
willful  or   habitual   failure   to   perform   requested  duties
commensurate with  his  employment  without  good  cause;  (ii) the
willful engaging in misconduct  or inaction materially injurious to
the Company; or (iii) the  conviction  for  a  felony or of a crime
involving moral turpitude, dishonesty or theft.   In the event of a
Change  of  Control  of  the   Company,  either  member  of  Senior
Management may elect to terminate the Restated Employment Agreement
within 120 days after  such  Change  of  Control  in which case the
electing member will be entitled to receive a payment equal to 2.99
times  that  member's  average  annualized  compensation  from  all
sources from and relating  to  the  Company, which is includable in
that member's  gross  income  (including  the  value of unexercised
options and termination  of  forfeiture  restrictions  on shares of
Common Stock issued to  that  member  pursuant  to the terms of the
Restricted Stock Agreement) for the  most recent five taxable years
ending with and including the calendar  year in which the Change of
Control occurs, together with the  immediate vesting of all options
to purchase shares  of  Common  Stock  not otherwise already vested
pursuant to the terms of such  options and all shares of Restricted
Stock not otherwise already  vested  pursuant  to  the terms of the
applicable  Restricted  Stock  Agreement.    Change  of  Control is
defined as: (i) any transaction  or  occurence which results in the
Company  ceasing  to  be   publically   owned  with  at  least  300
stockholders; (ii) any person or group becoming beneficial owner of
more than  40%  of  the  combined  voting  power  of  the Company's
outstanding securities; (iii) a  change  in  the composition of the
Board, as set forth in the Restated Employment Agreements; (iv) the
merger or consolidation of the Company  with or into any other non-
affiliated entity whereby  the  Company's  equity security holders,
immediately prior to such  transaction,  own  less  than 60% of the
equity; or (v) the sale or  transfer of all or substantially all of
the Company's assets.   In  the  event  of death or incapacity, the
member of  Senior  Management,  or  his  estate,  shall receive the
equivalent of 90 days base  salary  and  in the case of incapacity,
the continuation of health  and  disability benefits.  The Restated
Employment Agreements also provide that  in the event either member
of Senior Management does not receive an offer for a new employment
agreement containing terms at least as favorable as those contained
in  the  existing   Restated   Employment   Agreements  before  the
expiration of such Restated Employment Agreements, such member will
be entitled to receive a payment equal to one year's base salary

                           60 of 193

<PAGE>

under the terminating agreement.   Under these Restated  Employment
Agreements, each member of  Senior  Management  will be entitled to
receive an annual performance bonus  calculated using a formula, as
set forth in the Restated  Employment Agreements, which is based on
the Company's annual pre-tax  earnings, before extraordinary items,
over $10 million.  In  addition,  upon  the  sale of the Company, a
sale of substantially  all  of  its  assets  or  a merger where the
Company shareholders cease  to  own  a  majority of the outstanding
voting capital stock, Senior Management  will be entitled to a sale
bonus calculated using a formula which  is based on a percentage of
the excess value of the Company  over an initial value as set forth
in the Restated Employment Agreements.

In addition, Senior Management  remains entitled to receive certain
additional compensation out  of  funds  set  aside for distribution
under the Reorganization Plan  on  the  Effective  Date or from the
proceeds of assets liquidated  on  behalf of pre-petition creditors
under the Reorganization Plan.

As  of  January  1,  1995,  the  Company  entered  into  employment
agreements, effective  through  December  31,  1997,  with  Alan D.
Bloom, Richard A.  Link  and  Aivars  L.  Jerumanis.  The contracts
provide minimum base  salaries  of  $208,000, $205,000 and $190,000
for Messrs. Bloom,  Link  and  Jerumanis,  respectively, subject to
increases and bonuses, as may  be  determined  from time to time by
the Chief Executive Officer  of  the  Company.   The contracts with
Messrs.  Bloom,  Link  and  Jerumanis  provide  that  should  their
employment be terminated  under  certain  circumstances, they would
receive up to the equivalent of 4 months base salary.

Compensation of Directors
-------------------------

During 1996, certain members of the Board received compensation for
their  services  as  directors.    These  members  were  Claude  S.
Brinegar, Florence F. Courtright, Thomas  W. Field, Jr., Charles E.
Lewis and Alan S. Manne.   Messrs. Brinegar, Field, Lewis and Manne
each  received  cash  payments  of  $34,500,  $34,500,  $33,000 and
$33,000, respectively, during  1996,  while Ms. Courtright received
$30,000.  During 1997,  current  directors, excluding directors who
are also officers of  the  Company,  will receive cash compensation
for their services in the amount of $28,000 per year, plus $750 per
meeting.    In  addition,  these   directors  are  entitled  to  be
reimbursed for all  reasonable  out-of-pocket  expenses incurred in
connection with their services as directors of the Company.

Non-employee directors  of  the  Company  (the "Outside Directors")
have received options  to  purchase  shares  of  Common Stock at an
exercise price equal to the market price at the date of grant.  Set
forth below is a  schedule  of  the outstanding options at December
31, 1996 held by the Outside  Directors,  the date of grant and the
exercise price of such options:

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                         # of                       Exercise Price
      Director          Options    Date of Grant      Per Share
---------------------   -------  -----------------  --------------
Claude S. Brinegar       10,000  December 20, 1993     $ 9.63
                          5,000  July 26, 1996         $14.75

Florence F. Courtright   10,000  November 5, 1993      $10.88
                          5,000  July 26, 1996         $14.75

Thomas W. Field          10,000  April 1, 1992         $10.50
                         10,000  December 20, 1993     $ 9.63
                          5,000  July 26, 1996         $14.75

Charles E. Lewis          5,000  July 26, 1996         $14.75

Alan S. Manne            10,000  January 28, 1994      $12.63
                          5,000  July 26, 1996         $14.75


For those outstanding options  granted  prior  to July 26, 1996 the
options vested at the date of  grant and expire five years from the
date  of  grant  provided  these  directors  continue  to  serve as
directors of the Company.   If the directorship is terminated, such
options expire 30 days from the date of such termination.

The options granted July  26,  1996  were  issued under the Formula
Plan.  Commencing January 2, 1997, and each January 2nd thereafter,
each Outside Director then serving  on the Board of Directors shall
receive a grant of stock options to purchase 5,000 shares of Common
Stock.  The options  vest  six  months  from  the date of grant and
expire ten years  from  the  date  of  grant  provided the director
continues to serve as a director  of  the Company.  In the event of
termination of the directorship, such  options expire one year from
the date of such termination.

On May 8, 1996 Mr. Brinegar exercised 10,000 options granted to him
on July 18, 1991 at an exercise price of $9.25.


Compensation Committee Interlocks and Insider Participation
-----------------------------------------------------------

Peter J.  Ratican,  the  Company's  President  and  Chief Executive
Officer,  served  as  an  ex-officio  member  of  the  Compensation
Committee of the  Company  for  the  year  ended December 31, 1996.
Although  Mr.  Ratican  served  as  an  ex-officio  member  of this
Compensation Committee, he  did  not  participate  in any decisions
regarding his  own  compensation  as  an  executive  officer.   The
Company's Board of Directors  as  a  whole determines Mr. Ratican's
total compensation package.


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<PAGE>

           THE 1996 BOARD COMPENSATION COMMITTEE REPORT
                     ON EXECUTIVE COMPENSATION


Compensation Philosophy Regarding Executive Officers

The fundamental philosophy of the Company's compensation program is
to offer compensation  opportunities  for  all  employees which are
based on the  individual's  contribution  and personal performance.
Consideration is also  given  to  a  person's  potential for future
responsibility and promotion.

In designing  and  administering  the  individual  elements  of the
executive compensation program,  the Compensation Committee strives
to balance  short  and  long-term  incentive  objectives and employ
prudent judgment in  establishing  performance criteria, evaluating
performance   and    determining    actual    incentive   payments.
Essentially, the executive compensation  program of the Company has
been designed to:


o  support a  pay  for  performance  policy  that differentiates in
   compensation  amounts  based  on  corporate,  business  unit and
   individual performance;

o  motivate key executive  officers  to  achieve strategic business
   initiatives and reward them for their achievement;

o  provide compensation opportunities which are comparable to those
   offered by other leading companies  in the health care industry,
   thus allowing the  Company  to  compete  for and retain talented
   executives who are critical  to the Company's long-term success;
   and

o  align the interest of executives  with the long-term interest of
   stockholders through  award  opportunities  that  can  result in
   bonuses and ownership of common stock.


Relationship Of Performance Under The Compensation Program


The compensation program  supports  the  Company's internal culture
and human resource values which  are to foster career opportunities
and develop the best  people  at  all  levels  and to encourage and
reward actions which put the  interests  of  the Company as a whole
ahead of functional specialties and individual considerations.

During 1996, the compensation program for all executives, including
the Chief Executive Officer  (the  "CEO")  and  the four other most
highly compensated  executive  officers  other  than  the  CEO (the
"named executives"), is comprised of two elements:


o  Base salary  and  benefits  typically  offered  to executives by
   major corporations.

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<PAGE>

o  Stock option grants  to  provide  an  incentive that focuses the
   executives'  attention  on   managing   the   Company  from  the
   perspective of an owner  with  an  equity stake in the business.
   These stock options are  tied  to  the future performance of the
   Company's stock and  will  provide  value  to the recipient only
   when the price of the Company's stock increases above the option
   grant price.

For the named executives, other than the CEO and Eugene L. Froelich
the Company's Executive Vice President - Finance and Administration
and Chief Financial Officer (the "CFO"), the Compensation Committee
determined  that  to  attract  and  retain  quality  executives the
primary emphasis should remain in  1996  on base salary rather than
performance measured compensation.

In addition to the above mentioned compensation elements, there are
three elements in the  Company's executive compensation program for
the CEO and the CFO:

o Annual incentive compensation.

o Long-term compensation.

o Additional incentive compensation linked to maximization of
  shareholders' value.


Compensation Factors

Base Salary

Salary Plan:  Every  employee  of  the Company, including the named
executives, is assigned a grade  level  with a salary range that is
designed to  reflect  competitive  practice  for  the position they
hold.  At the end  of  each fiscal year, the Compensation Committee
reviews and approves an annual  salary  plan for all executives for
the upcoming  year.    This  salary  plan  is  developed  under the
ultimate  direction  of  the   CEO  who  informs  the  Compensation
Committee  as  to  the  amount  of  proposed  remuneration  for the
Company's executive officers  (excluding  the  CFO).   The salaries
approved  for   1996   reflect   consideration   of  the  immediate
supervisor's,  CEO's,  Compensation  Committee's  and  the  Board's
subjective assessment of the performance of each executive over the
past  year,  planned  changes   in  functional  responsibility  and
judgments as to the expected future contributions of the individual
executive.

Performance  Evaluation:    The  Compensation  Committee  has taken
particular note of the executives' success in effectively directing
the Company's operations under the difficult competitive conditions
in the markets  served  by  the  Company.    In  its  review of the
executives'   performance   and   compensation,   the  Compensation
Committee has also  taken  into  account the executives' consistent
commitment  to  the  long-term   success  of  the  Company  through
development and support of new or improved products.  The

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<PAGE>

Compensation Committee also  subjectively assessed past performance
and its  expectation  as  to  future  contributions  in leading the
Company and its businesses.

Competitive Data:  In  accordance with the Compensation Committee's
determination to  emphasize  base  salary  rather  than performance
based compensation, total cash compensation for executives in 1994,
other than the CEO and CFO, were set to meet or exceed the seventy-
fifth percentile  (75%)  for  the  specific  position  held, from a
private health care industry survey conducted in 1993 included in a
formal report provided by  an  independent  consulting firm.  Using
the  1993  analysis  as   a   base,   1996  cash  compensation  was
subjectively increased  for  such  executives  with  a  goal not to
exceed a five percent (5%) increase in the aggregate as compared to
1995 cash compensation.

The Compensation Committee considers the total compensation (earned
or potentially available) of each of the executives in establishing
each element of  compensation.    After completing their subjective
assessment of the above  salary factors, the Compensation Committee
increased the salaries of  the  named executives (excluding the CEO
and CFO) effective January 1, 1996.

The base salary for the CEO and CFO for 1996 was in accordance with
the five year employment agreements  entered  into as of January 1,
1992 and as  amended  by  amendments  dated  February 27, 1995 (the
"Employment  Agreements")   and   the   new   five-year  employment
agreements  entered  into  as  of  April  1,  1996  (the  "Restated
Employment Agreements").  The base  salary  for the CEO and CFO was
increased  effective  April  1,   1996  pursuant  to  the  Restated
Employment Agreements with a goal to compensate these executives to
meet  or  exceed  the  seventy-fifth  percentile  (75%)  for  their
specific positions and  responsibilities  based upon a broad-based,
major company industry study  of executive compensation included in
a report provided by an independent consulting firm.


Benefits

In the  past,  the  Company  adopted  certain  broad-based employee
benefit plans in which the  executives are permitted to participate
on the same terms  as  non-executive  employees who meet applicable
eligibility criteria,  subject  to  any  legal  limitations  on the
amounts that may be contributed or the benefits that may be payable
under the plans.  Benefits under these and other plans are not tied
to Company performance.

In assessing the Company's  overall compensation program, including
employee benefits, the Compensation Committee determined a separate
retirement program for key executives would provide an incentive in
attracting and retaining such executives as well as encourage their
contribution to the long-term growth  of the Company.  Accordingly,
the Compensation Committee adopted  the Maxicare Health Plans, Inc.
Supplemental Executive Retirement  Program  (the "SERP Plan") which
became effective January 1, 1997.  The SERP Plan provides for a

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<PAGE>

retirement income benefit based  upon  a  normal retirement date of
age 65 and specified years of service.


Stock Option Grants
-------------------

Stock options are  granted  to  employees  under  the 1990 and 1995
Stock Option Plans by  the  Option  Committee which is comprised of
two outside directors.  These  grants  are made only after approval
by the Compensation  Committee.    Stock  option grants provide the
right to purchase shares of  Common  Stock at the fair market value
(the closing price)  on  the  date  of  grant.    Each stock option
generally  becomes   exercisable   in   three  annual  installments
following the date of grant and has  a term from five to ten years.
The number of shares  covered  by an individual's option represents
the Option Committee's  subjective  assessment  of the individual's
relative value to  the  Company.    During  1996 stock options were
granted under the 1995 Stock Option  Plan to all three of the named
executives, other than the CEO and  CFO.  In determining the amount
of options to grant,  the  Option  Committee  took into account the
items discussed  above  under  "Base  Salary",  the  desire  to tie
closely the financial interests of the named executives to those of
the  Company's  stockholders  and   the  total  amount  of  options
currently held by the  named  executive.    The grants made in 1996
reflect such considerations.

The CEO and CFO were granted  stock  options as part of the overall
compensation package pursuant to the Restated Employment Agreements
as further discussed  below  under  "Other  Long-Term and Incentive
Compensation".


Annual Incentive Compensation
-----------------------------

In addition to the base salary, the CEO and the CFO are entitled to
earn an annual  performance  bonus  which  is  based on the pre-tax
earnings of the Company.    For  purposes of calculating the annual
bonus, the goals on pre-tax earnings set forth in the CEO's and the
CFO's Employment Agreements  were  carried  forward to the Restated
Employment Agreements.  An  annual  bonus  of  $256,862 was paid in
February 1996 to both the  CEO  and  the CFO based upon the audited
1995 pre-tax earnings pursuant  to  the  Employment Agreements.  An
annual bonus of $146,872 was paid  in February 1997 to both the CEO
and CFO based upon  the  audited  1996 pre-tax earnings pursuant to
the Restated Employment Agreements.

Other Long-Term and Incentive Compensation
------------------------------------------

In order to further  incentivize  the  CEO  and CFO, and strengthen
such executives' ongoing commitment to the Company, on February 27,
1995 the Compensation Committee awarded 65,000 shares of Restricted
Stock to both executives (individually the "Executive").  The

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<PAGE>

Restricted Stock  is  subject  to  complete  forfeiture  should the
Executive to which  it  has  been  awarded  be  terminated prior to
February 27, 1998.  Upon  the  Executive remaining in the employ of
the Company through February 27,  1998 the Restricted Stock becomes
fully vested.    Under  certain  defined  circumstances involving a
change of control of the Company  the Restricted Stock will vest in
full  immediately.    These  Restricted  Stock  awards  provide  an
additional incentive to the CEO and  CFO to remain in the employ of
the Company for  the  full  three  year  vesting  period as well as
further  aligning  their  financial  interests  with  those  of the
Company's stockholders.

As  a  part  of  the  compensation  under  the  Restated Employment
Agreements, the Compensation Committee  agreed to grant, subject to
stockholder approval, to the  CEO  and  CFO options to individually
purchase 350,000 shares of the  Company's  stock over the five year
employment term.  Accordingly,  on  May  14, 1996 the Board adopted
the Maxicare Health Plans, Inc. Senior Executives 1996 Stock Option
Plan (the  "Senior  Executives  Plan")  which  was  approved by the
stockholders on July 26, 1996.    The CEO and CFO were individually
granted 70,000 option  shares  on  July  26,  1996  pursuant to the
Senior  Executives  Plan.    The  Senior  Executives  Plan  further
provides for the grant of 70,000  option shares to both the CEO and
CFO on each January 1,  from  and including January 1, 1997 through
and including January 1, 2000.

The CEO's and CFO's  Restated Employment Agreements further provide
that in the  event  of  a  change  of  control  of the Company, the
Executive may terminate  the  Restated  Employment Agreement and be
entitled to receive a payment  equal to 2.99 times that Executive's
average annualized compensation,  as  defined,  over  the five year
period through the date of the  change  of control.  Also set forth
in the Restated Employment Agreements is a bonus on the sale of the
Company or substantially all of its assets or a merger into another
company.  This bonus is based on the extent to which the sale price
exceeds an initial  value  set  forth  in  the  CEO's and the CFO's
Restated Employment Agreements.

The bonuses paid pursuant  to  the Company's plan of reorganization
are not under the jurisdiction of the Compensation Committee.


Conclusion

Based  on  its  evaluation   of  these  factors,  the  Compensation
Committee believes that the executive  employees of the Company are
dedicated  to  achieving   significant  improvements  in  long-term
financial performance and that the compensation policies, plans and
programs  the  Compensation  Committee   and  the  Board  designed,
implemented and  administered  have  contributed  to achieving this
management focus.  The policies, plans and programs used in setting
1996  compensation  are  consistent   with  those  used  when  1995
compensation was set.

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<PAGE>

  1996 Compensation Committee:

    Thomas W. Field, Jr., Chairman

    Claude S. Brinegar

    Florence F. Courtright

    Peter J. Ratican (ex-officio)


Comparison of Cumulative Total Return Graph
-------------------------------------------

The following graph presents  a  five year comparison of cumulative
total returns for the Common  Stock  of  the Company, the index for
the NASDAQ Stock  Market  (U.S.  Companies)  and  an  index of peer
companies (the  "Managed  Care  Group")  selected  by  the Board of
Directors.  The Managed Care  Group  for 1992 and 1993 consisted of
seven  other  managed  care  companies:  Coventry  Corporation, FHP
International,  Foundation  Health  Corporation,  PacifiCare Health
Systems, Inc., Qual-Med, Inc.,  TakeCare, Inc. and Wellpoint Health
Networks (as of February 1993).    As a result of corporate mergers
involving Qual-Med, Inc. with  Health  Net  and TakeCare, Inc. with
FHP International, the Managed Care  Group  for 1994, 1995 and 1996
consists of:  Coventry  Corporation,  FHP International, Foundation
Health  Corporation,  PacifiCare  Health  Systems,  Inc., Wellpoint
Health Networks  and  Health  Systems  International (the successor
company of  Qual-Med,  Inc.).    Total  return  assumes the monthly
reinvestment of dividends.

                           68 of 193

<PAGE>



     COMPARISON AS OF DECEMBER 31 OF CUMULATIVE TOTAL RETURN
     -------------------------------------------------------


                          MAXICARE
MEASUREMENT PERIOD      HEALTH PLANS,                 MANAGED CARE
(FISCAL YEAR COVERED)      INC.         NASDAQ U.S.      GROUP
---------------------   -------------   -----------   ------------
[S]                      [C]             [C]            [C]
1991                     $100.00         $100.00        $100.00
1992                     $130.77         $116.38        $179.09
1993                     $100.00         $133.59        $174.71
1994                     $155.13         $130.59        $200.59
1995                     $275.64         $184.67        $235.00
1996                     $228.21         $227.16        $214.15






                           69 of 193

<PAGE>


Item 12.  Security Ownership of Certain Beneficial Owners and
          ---------------------------------------------------
          Management
          ----------


The following table sets  forth  the  number  and percentage of the
outstanding  shares  of  Common  Stock  owned  beneficially  as  of
December  31,  1996  by  each  director,  by  the  Company's  Chief
Executive  Officer  ("CEO"),   by   the   four  other  most  highly
compensated executive officers other than the CEO, by all directors
and executive officers as a group,  and  by each person who, to the
knowledge of the Company,  beneficially  owned  more than 5% of any
class of the Company's voting stock on such date.


                                           Amount and Nature of
                                         Beneficial Ownership(1)
                                         -----------------------
                                                      Percentage
                                          Common      of Common
Name and Address of Person or Group       Stock(2)     Stock(3)
-----------------------------------      ---------    ----------
RCM Capital Management, L.L.C. (4)       1,532,900       8.7%
  Four Embarcadero Center
  San Francisco, California  94111 and

Dresdner Bank AG (4)
  Jurgen-Ponto-Platz 1
  60301 Frankfurt, Germany

Franklin Resources, Inc.,                1,431,800       8.2%
Charles B. Johnson and
Rupert H. Johnson, Jr. (5)
  777 Mariners Island Boulevard
  San Mateo, California  94404 and
Franklin Mutual Advisers, Inc. (5)
  51 John F. Kennedy Parkway
  Short Hills, New Jersey  07078

Heartland Advisors, Inc. (6)             1,303,900       7.4%
  790 North Milwaukee Street
  Milwaukee, Wisconsin  53202

Morgan Stanley Group Inc. (7)            1,228,036       7.0%
  1585 Broadway
  New York, New York  10036

Miller Anderson & Sherrerd LLP (7)       1,161,700       6.6%
  1 Tower Bridge, Suite 1100
  West Conshohocken, Pennsylvania 19428

                           70 of 193

<PAGE>

                                           Amount and Nature of
                                         Beneficial Ownership(1)
                                         -----------------------
                                                      Percentage
                                          Common      of Common
Name and Address of Person or Group       Stock(2)     Stock(3)
-----------------------------------      ---------    ----------
Peter J. Ratican (8)                       562,996       3.1%
  1149 South Broadway Street
  Los Angeles, California  90015

Eugene L. Froelich (8)                     562,778       3.1%
  1149 South Broadway Street
  Los Angeles, California  90015

Richard A. Link (9)                         61,687        *
  1149 South Broadway Street
  Los Angeles, California  90015

Aivars L. Jerumanis (10)                    35,999        *
  1149 South Broadway Street
  Los Angeles, California  90015

Thomas W. Field, Jr. (11)(12)               25,000        *
  1149 South Broadway Street
  Los Angeles, California  90015

Claude S. Brinegar (12)(13)                 19,000        *
  1149 South Broadway Street
  Los Angeles, California  90015

Alan S. Manne (12)(13)                      15,500        *
  1149 South Broadway Street
  Los Angeles, California  90015

Florence F. Courtright (11)(12)             15,000        *
  1149 South Broadway Street
  Los Angeles, California  90015

Alan D. Bloom (14)                           5,362        *
  1149 South Broadway Street
  Los Angeles, California  90015

Charles E. Lewis (12)(14)                    5,016        *
  1149 South Broadway Street
  Los Angeles, California  90015


All Directors and Executive Officers
  as a Group (14 persons) (15)           1,451,153       7.7%


-------------------------
* - less than one percent

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<PAGE>

(1)  Except  as  otherwise   set   forth  herein,  all  information
     pertaining to the  holdings  of  persons  who beneficially own
     more than 5% of any class of the Company's voting stock (other
     than the Company or  its  executive officers and directors) is
     based on filings with  the  Securities and Exchange Commission
     (the "SEC") and information provided by the record holders.

(2)  In setting forth "beneficial" ownership,  the rules of the SEC
     require that shares  underlying currently exercisable options,
     including options  which  become  exercisable  within 60 days,
     held by a described person  be treated as "beneficially" owned
     and further require that  every  person  who has or shares the
     power to vote or to dispose  of shares of stock be reported as
     a "beneficial" owner of all  shares  as to which any such sole
     or shared power exists.    As  a consequence, shares which are
     not yet outstanding  are,  if  obtainable  upon exercise of an
     option which is exercisable  or will become exercisable within
     60 days, nevertheless treated  as  "beneficially" owned by the
     designated person, and several persons may be deemed to be the
     "beneficial" owners of the  same  securities if they share the
     power to vote or dispose of them.

(3)  Assumes 17,565,318 shares  of  Common  Stock outstanding, and,
     with respect to each listed  beneficial owner, the exercise or
     conversion of any  option  or  right  held  by each such owner
     exercisable or convertible within 60 days.

(4)  RCM  Capital  Management,   L.L.C.   ("RCM   Capital")  is  an
     investment  adviser  registered  under   Section  203  of  the
     Investment Advisors  Act  of  1940.    RCM  Limited L.P. ("RCM
     Limited") is the Managing Agent  of  RCM Capital.  RCM Limited
     has beneficial ownership  of  these  shares  to the extent RCM
     Limited  may  be  deemed   to  have  beneficial  ownership  of
     securities managed by  RCM  Capital.   RCM General Corporation
     ("RCM General") is  the  General  Partner  of RCM Limited, the
     Managing Agent of  RCM  Capital.    RCM General has beneficial
     ownership of these shares  to  the  extent  RCM General may be
     deemed to have beneficial  ownership  of securities managed by
     RCM Capital.  These  beneficial  owners have sole voting power
     with respect to 1,383,900  shares, sole dispositive power with
     respect to 1,522,900 shares  and shared dispositive power with
     respect to 10,000 shares.   The above information presented in
     regards to the  beneficial  ownership  of the Company's Common
     Stock by RCM Capital,  RCM  Limited  and  RCM General is based
     upon a Schedule 13G filed  jointly by RCM Capital, RCM Limited
     and RCM General with the SEC on January 30, 1997.

     RCM  Capital  Funds  is   a  diversified  open-end  management
     investment company registered under the Investment Company Act
     of 1940 and is comprised of  three series of stock funds.  RCM
     Capital Funds  has  retained  RCM  Capital  as  the investment
     manager for all three  series  of  stock funds.  As investment
     manager, RCM Capital makes  all  investment decisions for each
     series  of  RCM   Capital   Funds,   subject  to  the  overall
     supervision of the Board of Directors of RCM Capital Funds.

                           72 of 193

<PAGE>

Accordingly,  these  shares  are   also   included  in  the  shares
beneficially owned by RCM  Capital.    These beneficial owners have
sole dispositive power with respect  to  696,000 shares.  The above
information presented in regards to the beneficial ownership of the
Company's Common Stock  by  RCM  Capital  Funds  and RCM Capital is
based upon a Schedule 13G filed  by  RCM Capital Funds with the SEC
on February 14, 1997.

     Dresdner Bank  AG  ("Dresdner")  is  an  international banking
     organization headquartered in Frankfurt, Germany.  RCM Capital
     is  a  wholly-owned  subsidiary  of  Dresdner.    Dresdner has
     beneficial ownership of these  shares  only to the extent that
     Dresdner may be deemed to  have beneficial ownership of shares
     deemed to be beneficially  owned  by  RCM  Capital.  The above
     information presented in  regards  to the beneficial ownership
     of the Company's  Common  Stock  by  Dresdner  is based upon a
     Schedule 13G filed on  behalf  of  Dresdner  by RCM Capital on
     February 7, 1997.

(5)  These shares are beneficially  owned  by  one  or more open or
     closed-end  investment  companies  or  other  managed accounts
     which are advised by  direct  and indirect investment advisory
     subsidiaries   (the   "Adviser   Subsidiaries")   of  Franklin
     Resources, Inc. ("FRI").    Such  advisory  contracts grant to
     such Adviser Subsidiaries all voting and investment power over
     the securities owned  by  such  advisory  clients.  Therefore,
     such Adviser Subsidiaries may be deemed to be, for purposes of
     Rule 13d-3 under  the  Securities  Exchange  Act  of 1934, the
     beneficial owner of these shares.

     Charles B. Johnson and Rupert  H. Johnson, Jr. (the "Principal
     Shareholders") each own in  excess  of  10% of the outstanding
     Common Stock of FRI and are the principal shareholders of FRI.
     FRI and the Principal  Shareholders  may  be deemed to be, for
     purposes of Rule  13d-3  under  the  1934  Act, the beneficial
     owner of securities held  by  persons  and entities advised by
     FRI or its subsidiaries.   FRI, the Principal Shareholders and
     each  of  the  Adviser   Subsidiaries  disclaim  any  economic
     interest or beneficial ownership in any of these shares.

     These  beneficial  owners  have  sole  voting  power  and sole
     dispositive power with respect to 1,431,800 shares.  The above
     information presented in  regards  to the beneficial ownership
     of  the  Company's   Common   Stock   by  FRI,  the  Principal
     Shareholders and  the  Adviser  Subsidiaries  is  based upon a
     Schedule  13G  filed  with  the  SEC  by  FRI,  the  Principal
     Shareholders and  the  Adviser  Subsidiaries  on  February 12,
     1997.

(6)  Heartland Advisors, Inc.  is  an investment adviser registered
     under Section 203 of the Investment Advisors Act of 1940.  All
     shares are held  in  various  investment  advisory accounts of
     Heartland Advisors, Inc.    These  beneficial owners have sole
     voting  power  with  respect  to  1,275,400  shares  and  sole
     dispositive power with respect to 1,303,900 shares.  The above

                           73 of 193

<PAGE>

information presented in regards to the beneficial ownership of the
Company's Common Stock by Heartland  Advisors, Inc. is based upon a
Schedule 13G filed  by  Heartland  Advisors,  Inc.  with the SEC on
February 12, 1997.

(7)  Morgan Stanley Group Inc.  is an investment adviser registered
     under Section 203  of  the  Investment  Advisors  Act of 1940.
     Morgan Stanley Group Inc. has shared voting power with respect
     to 1,186,436 of these shares and shared dispositive power with
     respect to 1,228,036 of  these  shares.  The above information
     presented  in  regards  to  the  beneficial  ownership  of the
     Company's Common Stock is based  upon  a Schedule 13G filed by
     Morgan Stanley Group Inc.  and  Miller Anderson & Sherrerd LLP
     with the SEC on February 15, 1997.

     Miller  Anderson  &  Sherrerd  LLP  is  an  investment adviser
     registered under Section 203 of the Investment Advisors Act of
     1940.   Miller  Anderson  &  Sherrerd  LLP  is  a wholly-owned
     subsidiary of the Morgan Stanley  Group Inc. Miller Anderson &
     Sherrerd LLP has shared voting power with respect to 1,120,100
     of these shares and  shared  dispositive power with respect to
     1,161,700 of these  shares  (all  shares  of Miller Anderson &
     Sherrerd LLP are  also  included  in  the beneficial ownership
     disclosures attributed to  Morgan  Stanley  Group  Inc. in the
     preceding paragraph).    The  above  information  presented in
     regards to the  beneficial  ownership  of the Company's Common
     Stock is based upon  a  Schedule  13G  filed by Morgan Stanley
     Group Inc. and Miller Anderson &  Sherrerd LLP with the SEC on
     February 15, 1997.

(8)  Includes 497,778 shares which are subject to options which are
     currently exercisable  or  will  become  exercisable within 60
     days.

(9)  Includes 61,666 shares which are  subject to options which are
     currently exercisable  or  will  become  exercisable within 60
     days.

(10) Includes 29,999 shares which are  subject to options which are
     currently exercisable  or  will  become  exercisable within 60
     days.

(11) All  shares  are  subject   to  options  which  are  currently
     exercisable or will become exercisable within 60 days.

(12) Does not include the Unallocated Shares, held of record by the
     Company.  These shares are  held by the Company, as disbursing
     agent  for  the  benefit  of  holders  of  Reorganization Plan
     classes 5A through 5H, 7 and  8A through 8D allowed claims and
     Reorganization Plan  class  12  allowed  interests  and equity
     claims.  The Company  disclaims  beneficial ownership of these
     shares.     Under   certain   circumstances,  the  Independent
     Directors, currently Messrs. Brinegar,  Field, Lewis and Manne
     and  Ms.  Courtright,  have  rights  to  vote  the Unallocated
     Shares.    The   Independent   Directors  disclaim  beneficial
     ownership of these  shares.    For  further information on the
     voting  of  these  shares,   see   "Item  5.  Market  for  the
     Registrant's Common Stock and Related Stockholder Matters".

                           74 of 193

<PAGE>


(13) Includes 15,000 shares which are  subject to options which are
     currently exercisable  or  will  become  exercisable within 60
     days.

(14) Includes 5,000 shares which  are  subject to options which are
     currently exercisable  or  will  become  exercisable within 60
     days.

(15) Includes 1,309,688 shares which  are  subject to options which
     are currently exercisable or will become exercisable within 60
     days.

                           75 of 193

<PAGE>

Item 13. Certain Relationships and Related Transactions
         ----------------------------------------------

On  February  18,  1997  the  Company  entered  into  recourse loan
agreements with  Peter  J.  Ratican  and  Eugene  L.  Froelich (the
"Executives" and individually the  "Executive") whereby the Company
loaned to each Executive $2,229,028 in connection with the exercise
of certain stock options granted  to the Executives on February 25,
1992 (see Item. 8.  Financial  Statements  and Supplementary Data -
Note 5 to  the  Company's  Consolidated  Financial Statements). The
loans are evidenced by a secured Promissory Note which provides for
interest compounding  monthly  at  the  one  year  London Interbank
Offered Rate plus 50 basis points  in  effect from time to time and
subject to certain adjustments in the event the Company enters into
a transaction to borrow funds.   The  interest rate in effect as of
February 18, 1997 was 6.25%.  All principal and accrued interest is
due at the maturity  date  of  April  1,  2001  or upon an event of
default; provided however, that if  Executive shall sell any shares
of the Company's Common  Stock  serving  as security under the loan
agreement, then  Executive  shall  pay  a  pro  rata  share  of the
proceeds to  the  Company  to  be  applied  against any outstanding
principal and accrued interest of such Executive as of such date.

                           76 of 193

<PAGE>

                              PART IV
                              -------


Item 14. Exhibits, Financial Statement Schedules, and Reports on
         -------------------------------------------------------
         Form 8-K
         --------

(a) 1. Financial Statements
         The  following   consolidated   financial   statements  of
         Maxicare Health Plans, Inc. are included in this report in
         response to Item 8.

         Report of Independent Auditors - Ernst & Young LLP

         Consolidated Balance Sheets - At December 31, 1996
           and 1995
         Consolidated Statements of Operations - Years ended
           December 31, 1996, 1995 and 1994
         Consolidated Statements of Cash Flows - Years ended
           December 31, 1996, 1995 and 1994
         Consolidated Statements of Changes in Shareholders'
           Equity - Years ended December 31, 1996, 1995 and 1994
         Notes to Consolidated Financial Statements

(a) 2. Financial Statement Schedules

         Schedule I - Condensed Financial Information of Registrant
         - Condensed Balance Sheets at  December 31, 1996 and 1995,
         Condensed   Statements   of   Operations   and   Condensed
         Statements of Cash Flows for  the years ended December 31,
         1996,  1995  and   1994,   Notes  to  Condensed  Financial
         Information of Registrant

         Schedule II -  Valuation  and  Qualifying Accounts for the
         years ended December 31, 1996, 1995 and 1994

All other financial statement schedules have been omitted since the
required information  is  not  present  or  not  present in amounts
sufficient to require submission  of  the  schedule, or because the
required information  is  included  in  the  consolidated financial
statements or notes thereto.

(a) 3. Exhibits

 2.1   Joint Plan of Reorganization dated May 14, 1990, as modified
       on May 24, 1990 and July 12, 1990 (without schedules)*

 2.2   Order Confirming Joint Plan  of Reorganization dated May 14,
       1990, as  Modified,  entered  on  August  31,  1990 (without
       exhibits or schedules)*

 2.3   Amendment to Order  Confirming  Joint Plan of Reorganization
       dated May 14, 1990, as Modified, entered on August 31, 1990*

                           77 of 193

<PAGE>

 2.4   Stipulation and Order Re  Conditions to Effectiveness of the
       Plan, entered on December 3, 1990*

 2.5   Notice That The Conditions to Effectiveness of the Plan Have
       Been Met or Waived, filed on December 4, 1990*

 2.6   Agreement and Plan of Merger  of Maxicare Health Plans, Inc.
       and HealthCare  USA  Inc.,  dated  as  of  December  5, 1990
       (without exhibits or schedules)*

 3.1   Charter  of  Maxicare   Health   Plans,   Inc.,  a  Delaware
       corporation*

 3.3   Amendment to  Charter  of  Maxicare  Health  Plans,  Inc., a
       Delaware corporation@

 3.4   Amended Bylaws of  Maxicare  Health  Plans, Inc., a Delaware
       corporation@@@

 4.1   Form of Certificate of  New  Common Stock of Maxicare Health
       Plans, Inc.*

 4.2   Form of Certificate  of  Warrant  of  Maxicare Health Plans,
       Inc.*

 4.4   Warrant Agreement by and between Maxicare Health Plans, Inc.
       and American Stock  Transfer  &  Trust  Company, dated as of
       December 5, 1990*

 4.5   Stock  Transfer  Agent  Agreement  by  and  between Maxicare
       Health Plans,  Inc.,  and  American  Stock  Transfer & Trust
       Company, dated as of December 5, 1990*

 4.6   Registration Undertaking  by  Maxicare  Health  Plans, Inc.,
       dated as of December 5, 1990*

 4.8   Portions of Charter of Maxicare Health Plans, Inc., relating
       to the  rights  of  holders  of  the  New  Common Stock, the
       Warrants, or the New Senior Notes*

 4.9   Portions of Bylaws of  Maxicare Health Plans, Inc., relating
       to the  rights  of  holders  of  the  New  Common Stock, the
       Warrants, or the New Senior Notes*

 4.10  Series A  Cumulative  Convertible  Preferred  Stock Purchase
       Agreement dated as of December 17, 1991**

 4.11  Series A  Cumulative  Convertible  Preferred  Stock Purchase
       Agreement dated as of January 31, 1992**

 4.12  Form of Certificate  of  Preferred  Stock of Maxicare Health
       Plans, Inc.@

10.1   Management Incentive Program*

                           78 of 193

<PAGE>

10.2   Incentive Compensation Agreement*

10.3b  Employment  and  Indemnification  Agreement  by  and between
       Maxicare Health Plans, Inc.  and  Peter J. Ratican, dated as
       of January 1, 1992@

10.3c  Amendment  No.  1  to  the  Employment  and  Indemnification
       Agreement by and  between  Maxicare  Health  Plans, Inc. and
       Peter J. Ratican, dated as of January 1, 1992@@@@

10.3d  Amended   and   Restated   Employment   and  Indemnification
       Agreement by and  between  Maxicare  Health  Plans, Inc. and
       Peter J. Ratican, dated as of April 1, 1996###

10.3e  Loan Agreement by  and  between  Maxicare Health Plans, Inc.
       and Peter J. Ratican entered into as of February 18, 1997

10.3f  Secured Promissory Note executed  by  Peter J. Ratican as of
       February 18, 1997

10.3g  Pledge Agreement by and  between Maxicare Health Plans, Inc.
       and Peter J. Ratican entered into as of February 18, 1997

10.3h  Amendment No. 1 to  the  Amended and Restated Employment and
       Indemnification Agreement  by  and  between  Maxicare Health
       Plans, Inc. and Peter J. Ratican.

10.4b  Employment  and  Indemnification  Agreement  by  and between
       Maxicare Health Plans,  Inc.  and  Eugene L. Froelich, dated
       January 1, 1992@

10.4c  Amendment  No.  1  to  the  Employment  and  Indemnification
       Agreement by and  between  Maxicare  Health  Plans, Inc. and
       Eugene L. Froelich, dated January 1, 1992@@@@

10.4d  Amended   and   Restated   Employment   and  Indemnification
       Agreement by and  between  Maxicare  Health  Plans, Inc. and
       Eugene L. Froelich, dated as of April 1, 1996###

10.4e  Loan Agreement by  and  between  Maxicare Health Plans, Inc.
       and Eugene L. Froelich entered into as of February 18, 1997

10.4f  Secured Promissory Note executed by Eugene L. Froelich as of
       February 18, 1997

10.4g  Pledge Agreement by and  between Maxicare Health Plans, Inc.
       and Eugene L. Froelich entered into as of February 18, 1997

10.4h  Amendment No. 1 to  the  Amended and Restated Employment and
       Indemnification Agreement  by  and  between  Maxicare Health
       Plans, Inc. and Eugene L. Froelich.

10.7e  Employment  and  Indemnification  Agreement  by  and between
       Maxicare Health Plans, Inc. and  Vicki F. Perry, dated as of
       January 1, 1995@@@@

                           79 of 193

<PAGE>

10.8d  Employment  and  Indemnification  Agreement  by  and between
       Maxicare Health Plans, Inc. and  Alan  D. Bloom, dated as of
       January 1, 1995@@@@

10.9d  Employment  and  Indemnification  Agreement  by  and between
       Maxicare Health Plans, Inc. and Richard A. Link, dated as of
       January 1, 1995@@@@

10.12e Employment  and  Indemnification  Agreement  by  and between
       Maxicare Health Plans, Inc.  and  Aivars L. Jerumanis, dated
       as of January 1, 1995@@@@

10.14  Stock Option Agreement by and between Maxicare Health Plans,
       Inc. and Peter J. Ratican, dated as of December 5, 1990*

10.14a Amendment No. 1 to the Stock Option Agreement by and between
       Maxicare Health Plans, Inc.  and  Peter J. Ratican, dated as
       of December 5, 1990###

10.15  Stock Option Agreement by and between Maxicare Health Plans,
       Inc. and Eugene L. Froelich, dated as of December 5, 1990*

10.15a Amendment No. 1 to the Stock Option Agreement by and between
       Maxicare Health Plans, Inc. and Eugene L. Froelich, dated as
       of December 5, 1990###

10.18  Form of  Stock  Option  Agreement  by  and  between Maxicare
       Health Plans, Inc. and Vicki  F. Perry, dated as of December
       5, 1990*

10.20  Stock Option Agreement by and between Maxicare Health Plans,
       Inc. and Richard A. Link, dated as of December 5, 1990*

10.23  Stock Option Agreement by and between Maxicare Health Plans,
       Inc. and Aivars L. Jerumanis, dated as of December 5, 1990*

10.28  Form of Distribution Trust Agreement*

10.30  Maxicare Health Plans, Inc. 401(k) Plan*

10.36  Stock Option Agreement by and between Maxicare Health Plans,
       Inc. and Claude S. Brinegar, dated as of July 18, 1991@

10.42  Stock Option Agreement by and between Maxicare Health Plans,
       Inc. and Peter J. Ratican, dated as of February 25, 1992@

10.42a Amendment No. 1 to the Stock Option Agreement by and between
       Maxicare Health Plans, Inc.  and  Peter J. Ratican, dated as
       of February 25, 1992###

10.42b Amendment No. 2 to the Stock Option Agreement by and between
       Maxicare Health Plans, Inc.  and  Peter J. Ratican, dated as
       of February 25, 1992

                           80 of 193

<PAGE>

10.43  Stock Option Agreement by and between Maxicare Health Plans,
       Inc. and Eugene L. Froelich, dated as of February 25, 1992@

10.43a Amendment No. 1 to the Stock Option Agreement by and between
       Maxicare Health Plans, Inc. and Eugene L. Froelich, dated as
       of February 25, 1992###

10.43b Amendment No. 2 to the Stock Option Agreement by and between
       Maxicare Health Plans, Inc. and Eugene L. Froelich, dated as
       of February 25, 1992

10.44  Amended Maxicare Health Plans, Inc. 1990 Stock Option Plan@

10.50  Stock Option Agreement by and between Maxicare Health Plans,
       Inc. and Thomas W. Field, Jr., dated as of April 1, 1992@@

10.51d Employment  and  Indemnification  Agreement  by  and between
       Maxicare Health Plans, Inc.  and  Robert J. Landis, dated as
       of January 1, 1995@@@@

10.52  Stock Option Agreement by and between Maxicare Health Plans,
       Inc. and Robert J. Landis, dated as of December 5, 1990@@

10.54  Stock Option Agreement by and between Maxicare Health Plans,
       Inc. and Florence  F.  Courtright,  dated  as of November 5,
       1993@@@

10.55  Stock Option Agreement by and between Maxicare Health Plans,
       Inc. and Vicki F. Perry, dated as of December 20, 1993@@@

10.56  Stock Option Agreement by and between Maxicare Health Plans,
       Inc. and Alan D. Bloom, dated as of December 20, 1993@@@

10.57  Stock Option Agreement by and between Maxicare Health Plans,
       Inc. and Richard A. Link, dated as of December 20, 1993@@@

10.58  Stock Option Agreement by and between Maxicare Health Plans,
       Inc. and  Aivars  L.  Jerumanis,  dated  as  of December 20,
       1993@@@

10.59  Stock Option Agreement by and between Maxicare Health Plans,
       Inc. and Robert J. Landis, dated as of December 20, 1993@@@

10.61  Stock Option Agreement by and between Maxicare Health Plans,
       Inc. and Thomas  W.  Field,  Jr.,  dated  as of December 20,
       1993@@@

10.63  Stock Option Agreement by and between Maxicare Health Plans,
       Inc. and  Claude  S.  Brinegar,  dated  as  of  December 20,
       1993@@@

10.68  Lease  by  and  between  Maxicare  Health  Plans,  Inc.  and
       Transamerica Occidental Life Insurance  Company, dated as of
       June 1, 1994#

                           81 of 193

<PAGE>

10.69  Stock Option Agreement by and between Maxicare Health Plans,
       Inc. and Alan S. Manne, dated as of January 28, 1994@@@@

10.70  Stock Option Agreement by and between Maxicare Health Plans,
       Inc. and Alan D. Bloom, dated as of December 8, 1994@@@@

10.71  Stock Option Agreement by and between Maxicare Health Plans,
       Inc. and  Aivars  L.  Jerumanis,  dated  as  of  December 8,
       1994@@@@

10.72  Stock Option Agreement by and between Maxicare Health Plans,
       Inc. and Richard A. Link, dated as of December 8, 1994@@@@

10.74  Stock Option Agreement by and between Maxicare Health Plans,
       Inc. and Robert J. Landis, dated as of December 8, 1994@@@@

10.75  Stock Option Agreement by and between Maxicare Health Plans,
       Inc. and Vicki F. Perry, dated as of December 8, 1994@@@@

10.76  Restricted Stock  Grant  Agreement  by  and between Maxicare
       Health  Plans,  Inc.  and  Peter  J.  Ratican,  dated  as of
       February 27, 1995@@@@

10.77  Restricted Stock  Grant  Agreement  by  and between Maxicare
       Health Plans,  Inc.  and  Eugene  L.  Froelich,  dated as of
       February 27, 1995@@@@

10.78  Maxicare Health Plans, Inc. 1995 Stock Option Plan##

10.78a Amendment Number One to the Maxicare Health Plans, Inc. 1995
       Stock Option Plan

10.79  Employment  and  Indemnification  Agreement  by  and between
       Maxicare Health Plans, Inc. and  Warren D. Foon, dated as of
       January 1, 1995@@@@@

10.80a Stock Option Agreement by and between Maxicare Health Plans,
       Inc. and Warren D. Foon, dated as of May 20, 1991@@@@@

10.80c Stock Option Agreement by and between Maxicare Health Plans,
       Inc. and Warren D. Foon, dated as of December 20, 1993@@@@@

10.80d Stock Option Agreement by and between Maxicare Health Plans,
       Inc. and Warren D. Foon, dated as of December 8, 1994@@@@@

10.81  Form  of  Stock   Option   Agreement   relating  to  Exhibit
       10.78@@@@@

10.82a Stock Option Agreement by and between Maxicare Health Plans,
       Inc. and Peter J. Ratican, dated as of April 1, 1996###

10.82b Stock Option Agreement by and between Maxicare Health Plans,
       Inc. and Eugene L. Froelich, dated as of April 1, 1996###

                           82 of 193

<PAGE>

10.83  Maxicare Health Plans,  Inc.  Outside Directors 1996 Formula
       Stock Option Plan####

10.83a Amendment Number  One  to  the  Maxicare  Health Plans, Inc.
       Outside Directors 1996 Formula Stock Option Plan

10.84  Maxicare Health  Plans,  Inc.  Senior  Executives 1996 Stock
       Option Plan####

10.84a Amendment Number  One  to  the  Maxicare  Health Plans, Inc.
       Senior Executives 1996 Stock Option Plan

21     List of Subsidiaries@@@

23.1   Consent of Independent Auditors - Ernst & Young LLP

27     Financial Data Schedule for the year ended December 31, 1996

28.1   Notice That The Conditions to Effectiveness of the Plan Have
       Been Met or Waived***

28.2   Stipulation    and    Order    Regarding    Conditions    to
       Effectiveness of Joint Plan of Reorganization***


-------------------

*     Incorporated by  reference  from  the  Company's Registration
      Statement on Form 10,  declared  effective March 18, 1991, in
      which this exhibit bore the same exhibit number.

**    Incorporated by reference from  the Company's Reports on Form
      8-K dated December 17,  1991  and  January 31, 1992, in which
      this exhibit bore the same exhibit number.

***   Incorporated by reference from  the  Company's Report on Form
      8-K dated December 5,  1990,  in  which this exhibit bore the
      same exhibit number.

@     Incorporated by reference from the Company's Annual Report on
      Form 10-K for the year ended December 31, 1991, in which this
      exhibit bore the same exhibit number.

@@    Incorporated by reference from the Company's Annual Report on
      Form 10-K for the year ended December 31, 1992, in which this
      exhibit bore the same exhibit number.

@@@   Incorporated by reference from the Company's Annual Report on
      Form 10-K for the year ended December 31, 1993, in which this
      exhibit bore the same exhibit number.

@@@@  Incorporated by reference from the Company's Annual Report on
      Form 10-K for the year ended December 31, 1994, in which this
      exhibit bore the same exhibit number.

                           83 of 193

<PAGE>

@@@@@ Incorporated by reference from the Company's Annual Report on
      Form 10-K for the year ended December 31, 1995, in which this
      exhibit bore the same exhibit number.

#     Incorporated by reference from the Company's Quarterly Report
      on Form 10-Q  for  the  quarterly  period ended September 30,
      1994, in which this exhibit bore the same exhibit number.

##    Incorporated by reference from the Company's Quarterly Report
      on Form 10-Q  for  the  quarterly  period ended September 30,
      1995, in which this exhibit bore the same exhibit number.

###   Incorporated by reference from the Company's Quarterly Report
      on Form 10-Q for the quarterly period ended June 30, 1996, in
      which this exhibit bore the same exhibit number.

####  Incorporated by reference from  the Company's Proxy Statement
      for Annual Meeting of Stockholders held on July 26, 1996.

(b)   Reports on Form 8-K

      None.

                           84 of 193

<PAGE>

                             SIGNATURES



         Pursuant to the requirements of Section 13 of the Securities
Exchange Act of 1934, the  Registrant  has duly caused this report to
be  signed  on  its   behalf   by  the  undersigned,  thereunto  duly
authorized.


    March 31, 1997                    /s/ PETER J. RATICAN
    --------------                    ------------------------
         Date                             Peter J. Ratican
                                       Chief Executive Officer


    March 31, 1997                    /s/ EUGENE L. FROELICH
    --------------                    ------------------------
         Date                             Eugene L. Froelich
                                       Chief Financial Officer


    March 31, 1997                    /s/ RICHARD A. LINK
    --------------                    ------------------------
         Date                             Richard A. Link
                                       Principal Accounting
                                             Officer

                           85 of 193

<PAGE>

         Pursuant to the requirements  of the Securities Exchange Act
of 1934, this report has  been  signed below by the following persons
on behalf of the Registrant  and  in  the capacities and on the dates
indicated.


   Signatures                      Title                 Date
   ----------                      -----                 ----


/s/ PETER J. RATICAN         Chairman and Director   March 31, 1997
--------------------
    Peter J. Ratican


/s/ EUGENE L. FROELICH       Director                March 31, 1997
----------------------
    Eugene L. Froelich


/s/ CLAUDE S. BRINEGAR       Director                March 23, 1997
-----------------------
    Claude S. Brinegar


/s/ FLORENCE F. COURTRIGHT   Director                March 23, 1997
--------------------------
    Florence F. Courtright


/s/ THOMAS W. FIELD, JR.     Director                March 28, 1997
------------------------
    Thomas W. Field, Jr.


/s/ CHARLES E. LEWIS         Director                March 23, 1997
--------------------
    Charles E. Lewis


/s/ ALAN S. MANNE            Director                March 22, 1997
-----------------
    Alan S. Manne

                           86 of 193

<PAGE>

                  MAXICARE HEALTH PLANS, INC.

  SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                   CONDENSED BALANCE SHEETS

                    (Amounts in thousands)
<TABLE>
<CAPTION>



                                                                        December 31,
                                                                       1996      1995
                                                                     --------  --------
<S>                                                                <C>       <C>
CURRENT ASSETS
  Cash and cash equivalents......................................... $ 12,554  $  9,359
  Marketable securities.............................................   24,297    15,008
  Amounts due from affiliates - Note 2..............................    4,031     3,081
  Deferred tax asset................................................   18,000    14,000
  Federal income tax refund receivable..............................              2,200
  Other current assets..............................................    2,328       546
                                                                     --------  --------
     TOTAL CURRENT ASSETS...........................................   61,210    44,194

PROPERTY AND EQUIPMENT, NET.........................................    1,148     2,098
INVESTMENT IN SUBSIDIARIES..........................................   60,473    59,081
OTHER LONG-TERM ASSETS..............................................      267       244
                                                                     --------  --------
     TOTAL ASSETS................................................... $123,098  $105,617
                                                                     ========  ========

CURRENT LIABILITIES
  Payable to disbursing agent....................................... $  1,000  $  6,248
  Amounts due to affiliates - Note 2................................       42       184
  Other current liabilities.........................................    5,446     3,678
                                                                     --------  --------
     TOTAL CURRENT LIABILITIES......................................    6,488    10,110

OTHER LONG-TERM LIABILITIES.........................................      364       802
                                                                     --------  --------
     TOTAL LIABILITIES..............................................    6,852    10,912
                                                                     --------  --------

COMMITMENTS AND CONTINGENCIES - Note 3

TOTAL SHAREHOLDERS' EQUITY..........................................  116,246    94,705
                                                                     --------  --------
     TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY..................... $123,098  $105,617
                                                                     ========  ========








                See notes to condensed financial information of registrant.
</TABLE>

                           87 of 193

<PAGE>

                  MAXICARE HEALTH PLANS, INC.

  SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                CONDENSED STATEMENTS OF OPERATIONS

                    (Amounts in thousands)



<TABLE>
<CAPTION>
                                                                Years ended December 31,
                                                              1996        1995      1994
                                                             -------    -------   -------
<S>                                                         <C>        <C>       <C>
REVENUES
  Equity in earnings of subsidiaries........................ $ 1,287    $18,318   $ 9,895
  Service agreement income..................................  11,572     11,115     9,017
  Other income..............................................   6,728                   22
                                                             -------    -------   -------
     TOTAL REVENUES.........................................  19,587     29,433    18,934
                                                             -------    -------   -------
EXPENSES
  Marketing, general and administrative expenses............  11,667     14,123    14,576
  Depreciation and amortization.............................   1,077      1,011     1,875
                                                             -------    -------   -------
     TOTAL EXPENSES.........................................  12,744     15,134    16,451
                                                             -------    -------   -------
INCOME FROM OPERATIONS......................................   6,843     14,299     2,483

  Investment income.........................................   1,709      1,191       618
  Interest expense, net of inter-company interest income
    and expense.............................................     (71)       (34)      (20)
                                                             -------    -------   -------
INCOME BEFORE INCOME TAXES..................................   8,481     15,456     3,081

INCOME TAX BENEFIT..........................................  10,944     12,220    10,254
                                                             -------    -------   -------
NET INCOME..................................................  19,425     27,676    13,335

PREFERRED STOCK DIVIDENDS...................................                       (5,280)
                                                             -------    -------   -------

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS................. $19,425    $27,676   $ 8,055
                                                             =======    =======   =======







                 See notes to condensed financial information of registrant.

</TABLE>
                           88 of 193

<PAGE>


                  MAXICARE HEALTH PLANS, INC.

  SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                CONDENSED STATEMENTS OF CASH FLOWS

                    (Amounts in thousands)



<TABLE>
<CAPTION>
                                                            Years ended December 31,
                                                           1996       1995       1994
                                                         --------   --------   --------
<S>                                                     <C>        <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ............................................. $ 19,425   $ 27,676   $ 13,335
Adjustments to reconcile net income to net cash
provided by operating activities:
  Depreciation and amortization.........................    1,077      1,011      1,875
  Benefit from deferred income taxes....................   (4,000)    (4,000)    (4,000)
  Amortization of restricted stock......................      699        583
  Provision for long-term receivables valuation.........               2,004
  Equity in earnings of subsidiaries....................   (1,287)   (18,318)    (9,895)
  Changes in assets and liabilities:
   Changes in other miscellaneous assets and
     liabilities........................................   (4,297)    (3,372)     2,540
                                                         --------   --------   --------
Net cash provided by operating activities...............   11,617      5,584      3,855
                                                         --------   --------   --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of marketable securities, net...............   (9,289)    (4,254)    (8,230)
  Capital contributions to subsidiaries, net............  (11,300)    (5,530)    (4,770)
  Dividends received from subsidiaries..................   11,250      8,130      7,769
  Purchases of property and equipment...................      (24)       (53)      (208)
  Dispositions of property and equipment................                   3         10
                                                         --------   --------   --------
Net cash used for investing activities..................   (9,363)    (1,704)    (5,429)
                                                         --------   --------   --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Payments on capital lease obligations.................     (476)      (145)
  Stock options exercised...............................    1,417      1,621        717
  Redemption of preferred stock.........................                (525)
  Payment of preferred stock dividends..................                         (5,280)
  Warrants exercised....................................                          4,193
  Payments on long-term debt to affiliates..............                           (114)
                                                         --------   --------   --------
Net cash provided by (used for) financing activities....      941        951       (484)
                                                         --------   --------   --------
Net increase (decrease) in cash and cash equivalents....    3,195      4,831     (2,058)
Cash and cash equivalents at beginning of year..........    9,359      4,528      6,586
                                                         --------   --------   --------
Cash and cash equivalents at end of year................ $ 12,554   $  9,359   $  4,528
                                                         ========   ========   ========
Supplemental disclosures of cash flow information:
  Cash paid during the year for -
    Interest............................................ $     93   $     22   $     24
    Income taxes........................................ $    347   $  2,689   $    163

</TABLE>

                           89 of 193

<PAGE>

                  MAXICARE HEALTH PLANS, INC.

  SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                CONDENSED STATEMENTS OF CASH FLOWS

                    (Amounts in thousands)



<TABLE>
<CAPTION>
                                                            Years ended December 31,
                                                           1996      1995       1994
                                                         --------   -------    ------
<S>                                                     <C>        <C>        <C>
Supplemental schedule of non-cash investing activities:
  Capital lease obligations incurred for purchase of
    property and equipment and intangible assets........            $   963    $  484

Supplemental schedule of non-cash financing activities:
  Reclassification of preferred stock capital accounts
    to common stock capital accounts pursuant to the
    conversion of preferred stock to common stock.......            $53,195    $2,580
  Issuance of restricted common stock...................            $ 2,096






                 See notes to condensed financial information of registrant.

</TABLE>

                           90 of 193

<PAGE>

                    MAXICARE HEALTH PLANS, INC.

    SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

      NOTES TO CONDENSED FINANCIAL INFORMATION OF REGISTRANT



NOTE 1 - GENERAL

The  condensed  financial  information  of  the  registrant ("MHP")
should be  read  in  conjunction  with  the  consolidated financial
statements and the notes to consolidated financial statements which
are included elsewhere herein.

NOTE 2 - TRANSACTIONS WITH AFFILIATES

MHP operates under a  decentralized  and segregated cash management
system.  The operating  subsidiaries  currently pay monthly fees to
MHP pursuant to administrative services agreements.

NOTE 3 - COMMITMENTS AND CONTINGENCIES

MHP's assets held under  capital  leases  at  December 31, 1996 and
1995 of $958,000 and $1,247,000, respectively, (net of $488,000 and
$199,000, respectively, of  accumulated amortization) are comprised
primarily of equipment  leases.    Amortization expense for capital
leases is included in depreciation expense.

Future  minimum  lease  commitments  for  noncancelable  leases  at
December 31, 1996 were as follows:


                                    Operating   Capitalized
                                     Leases       Leases
     (Amounts in thousands)         ---------   -----------
     1997..........................  $1,339        $390
     1998..........................   1,435         267
     1999..........................   1,027
     2000..........................     149
     2001..........................       6
                                     ------        ----
     Total minimum
       obligations.................  $3,956         657
                                     ======

     Less current
       obligations.................                 390
     Long-term                                     ----
       obligations.................                $267
                                                   ====

                           91 of 193

<PAGE>

                   MAXICARE HEALTH PLANS, INC.

          SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                      (Amounts in thousands)

               For the Year Ended December 31, 1996


<TABLE>
<CAPTION>

Column A                   Column B               Column C              Column D        Column E
--------                  ----------      --------------------------   ----------     -------------
                                                  Additions
                                          --------------------------
                          Balance at      Charged to    Charged to
                          beginning       costs and   other accounts   Deductions      Balance at
Description               of period        expenses    - describe      - describe     end of period
-----------               ----------      ----------  --------------   ----------     -------------
<S>                      <C>             <C>         <C>              <C>            <C>
Allowance for
  doubtful accounts
  and retroactive
  billing adjustments      $2,941                       $2,171(1)                       $5,112

Other valuation
  accounts                  2,004                                       $1,674(2)          330
                           ------                       ------          ------          ------
                           $4,945                       $2,171          $1,674          $5,442
                           ======                       ======          ======          ======


(1)  Increase in allowance, net of retroactive billing adjustment write-offs.
(2)  Reduction to valuation allowance for long-term receivables.

</TABLE>
                                 For the Year Ended December 31, 1995


<TABLE>
<CAPTION>
Column A                   Column B               Column C              Column D        Column E
--------                  ----------      --------------------------   ----------     -------------
                                                  Additions
                                          --------------------------
                          Balance at      Charged to    Charged to
                          beginning       costs and   other accounts   Deductions      Balance at
Description               of period        expenses    - describe      - describe     end of period
-----------               ----------      ----------  --------------   ----------     -------------
<S>                      <C>             <C>         <C>              <C>            <C>
Allowance for
  doubtful accounts
  and retroactive
  billing adjustments       $3,371                                       $430(1)         $2,941

Other valuation
  accounts                      32        $2,004(2)                        32(3)          2,004
                            ------        ------                         ----            ------
                            $3,403        $2,004                         $462            $4,945
                            ======        ======                         ====            ======


(1)  Decrease in allowance, net of retroactive billing adjustment write-offs.
(2)  Increase to valuation allowance for long-term receivables.
(3)  Reduction in notes receivable reserve.
</TABLE>

                           92 of 193

<PAGE>


                                     MAXICARE HEALTH PLANS, INC.

                            SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                                        (Amounts in thousands)

                                 For the Year Ended December 31, 1994


<TABLE>
<CAPTION>

Column A                   Column B               Column C              Column D        Column E
--------                  ----------      --------------------------   ----------     -------------
                                                  Additions
                                          --------------------------
                          Balance at      Charged to    Charged to
                          beginning       costs and   other accounts   Deductions      Balance at
Description               of period        expenses    - describe      - describe     end of period
-----------               ----------      ----------  --------------   ----------     -------------
<S>                      <C>             <C>         <C>              <C>            <C>
Allowance for
  doubtful accounts
  and retroactive
  billing adjustments       $2,706                       $665(1)                         $3,371

Other valuation
  accounts                      34                                         $2(2)             32
                            ------                       ----              --            ------
                            $2,740                       $665              $2            $3,403
                            ======                       ====              ==            ======


(1)  Increase in allowance, net of retroactive billing adjustment write-offs.
(2)  Reduction in notes receivable reserve.

</TABLE>

                           93 of 193

<PAGE>

                         INDEX TO EXHIBITS



Exhibit                                               Sequential
Number    Description                                 Page Number
------    -----------------------------------------   -----------
2.1       Joint Plan of Reorganization dated May 14,
          1990, as modified on May 24, 1990 and
          July 12, 1990 (without schedules)*

2.2       Order Confirming Joint Plan of
          Reorganization dated May 14, 1990, as
          Modified, entered on August 31, 1990
          (without exhibits or schedules)*

2.3       Amendment to Order Confirming Joint Plan
          of Reorganization dated May 14, 1990, as
          Modified, entered on August 31, 1990*

2.4       Stipulation and Order Re Conditions to
          Effectiveness of the Plan, entered on
          December 3, 1990*

2.5       Notice That The Conditions to Effectiveness
          of the Plan Have Been Met or Waived, filed
          on December 4, 1990*

2.6       Agreement and Plan of Merger of Maxicare
          Health Plans, Inc. and HealthCare USA Inc.,
          dated as of December 5, 1990 (without
          exhibits or schedules)*

3.1       Charter of Maxicare Health Plans, Inc.,
          a Delaware corporation*

3.3       Amendment to Charter of Maxicare Health
          Plans, Inc., a Delaware corporation@

3.4       Amended Bylaws of Maxicare Health
          Plans, Inc., a Delaware corporation@@@

4.1       Form of Certificate of New Common Stock of
          Maxicare Health Plans, Inc.*

4.2       Form of Certificate of Warrant of Maxicare
          Health Plans, Inc.*

4.4       Warrant Agreement by and between Maxicare
          Health Plans, Inc. and American Stock
          Transfer & Trust Company, dated as of
          December 5, 1990*

                           94 of 193

<PAGE>

Exhibit                                               Sequential
Number    Description                                 Page Number
-------   ------------------------------------------  -----------
4.5       Stock Transfer Agent Agreement by and
          between Maxicare Health Plans, Inc.,
          and American Stock Transfer & Trust
          Company, dated as of December 5, 1990*

4.6       Registration Undertaking by Maxicare Health
          Plans, Inc., dated as of December 5, 1990*

4.8       Portions of Charter of Maxicare Health
          Plans, Inc., relating to the rights of
          holders of the New Common Stock, the
          Warrants, or the New Senior Notes*

4.9       Portions of Bylaws of Maxicare Health Plans,
          Inc., relating to the rights of holders of
          the New Common Stock, the Warrants, or the
          New Senior Notes*

4.10      Series A Cumulative Convertible Preferred
          Stock Purchase Agreement dated as of
          December 17, 1991**

4.11      Series A Cumulative Convertible Preferred
          Stock Purchase Agreement dated as of
          January 31, 1992**

4.12      Form of Certificate of Preferred Stock of
          Maxicare Health Plans, Inc.@

10.1      Management Incentive Program*

10.2      Incentive Compensation Agreement*

10.3b     Employment and Indemnification Agreement
          by and between Maxicare Health Plans, Inc.
          and Peter J. Ratican, dated as of January
          1, 1992@

10.3c     Amendment No. 1 to the Employment and
          Indemnification Agreement by and between
          Maxicare Health Plans, Inc. and Peter J.
          Ratican, dated as of January 1, 1992@@@@

10.3d     Amended and Restated Employment and
          Indemnification Agreement by and between
          Maxicare Health Plans, Inc. and Peter J.
          Ratican, dated as of April 1, 1996###

10.3e     Loan Agreement by and between Maxicare
          Health Plans, Inc. and Peter J. Ratican
          entered into as of February 18, 1997        103 of 193

                           95 of 193

<PAGE>

Exhibit                                               Sequential
Number  Description                                   Page Number
------  ------------------------------------------    -----------
10.3f   Secured Promissory Note executed by Peter
        J. Ratican as of February 18, 1997            124 of 193

10.3g   Pledge Agreement by and between Maxicare
        Health Plans, Inc. and Peter J. Ratican
        entered into as of February 18, 1997          126 of 193

10.3h   Amendment No. 1 to the Amended and
        Restated Employment and Indemnification
        Agreement by and between Maxicare Health
        Plans, Inc. and Peter J. Ratican.             139 of 193

10.4b   Employment and Indemnification Agreement
        by and between Maxicare Health Plans, Inc.
        and Eugene L. Froelich, dated January 1,
        1992@

10.4c   Amendment No. 1 to the Employment and
        Indemnification Agreement by and between
        Maxicare Health Plans, Inc. and Eugene L.
        Froelich dated, January 1, 1992@@@@

10.4d   Amended and Restated Employment and
        Indemnification Agreement by and between
        Maxicare Health Plans, Inc. and Eugene L.
        Froelich, dated as of April 1, 1996###

10.4e   Loan Agreement by and between Maxicare
        Health Plans, Inc. and Eugene L. Froelich
        entered into as of February 18, 1997          143 of 193

10.4f   Secured Promissory Note executed by Eugene
        L. Froelich as of February 18, 1997           164 of 193

10.4g   Pledge Agreement by and between Maxicare
        Health Plans, Inc. and Eugene L. Froelich
        entered into as of February 18, 1997          166 of 193

10.4h   Amendment No. 1 to the Amended and
        Restated Employment and Indemnification
        Agreement by and between Maxicare Health
        Plans, Inc. and Eugene L. Froelich.           179 of 193

10.7e   Employment and Indemnification Agreement
        by and between Maxicare Health Plans, Inc.
        and Vicki F. Perry, dated as of January
        1, 1995@@@@

10.8d   Employment and Indemnification Agreement
        by and between Maxicare Health Plans, Inc.
        and Alan D. Bloom, dated as of January 1,
        1995@@@@

                           96 of 193

<PAGE>

Exhibit                                               Sequential
Number  Description                                   Page Number
------  ------------------------------------------    -----------
10.9d   Employment and Indemnification Agreement
        by and between Maxicare Health Plans,
        Inc. and Richard A. Link, dated as of
        January 1, 1995@@@@

10.12e  Employment and Indemnification Agreement by
        and between Maxicare Health Plans, Inc. and
        Aivars Jerumanis, dated as of January 1,
        1995@@@@

10.14   Stock Option Agreement by and between
        Maxicare Health Plans, Inc. and Peter J.
        Ratican, dated as of December 5, 1990*

10.14a  Amendment No. 1 to the Stock Option
        Agreement by and between Maxicare Health
        Plans, Inc. and Peter J. Ratican, dated
        as of December 5, 1990###

10.15   Stock Option Agreement by and between
        Maxicare Health Plans, Inc. and Eugene L.
        Froelich, dated as of December 5, 1990*

10.15a  Amendment No. 1 to the Stock Option
        Agreement by and between Maxicare Health
        Plans, Inc. and Eugene L. Froelich, dated
        as of December 5, 1990###

10.18   Form of Stock Option Agreement by and
        between Maxicare Health Plans, Inc. and
        Vicki F. Perry, dated as of December 5,
        1990*

10.20   Stock Option Agreement by and between
        Maxicare Health Plans, Inc. and Richard
        A. Link, dated as of December 5, 1990*

10.23   Stock Option Agreement by and between
        Maxicare Health Plans, Inc. and Aivars L.
        Jerumanis, dated as of December 5, 1990*

10.28   Form of Distribution Trust Agreement*

10.30   Maxicare Health Plans, Inc. 401(k) Plan*

10.36   Stock Option Agreement by and between
        Maxicare Health Plans, Inc. and Claude
        S. Brinegar, dated as of July 18, 1991@

10.42   Stock Option Agreement by and between
        Maxicare Health Plans, Inc. and Peter J.
        Ratican, dated as of February 25, 1992@

                           97 of 193

<PAGE>

Exhibit                                               Sequential
Number   Description                                  Page Number
-------  -------------------------------------------  -----------
10.42a   Amendment No. 1 to the Stock Option
         Agreement by and between Maxicare Health
         Plans, Inc. and Peter J. Ratican, dated
         as of February 25, 1992###

10.42b   Amendment No. 2 to the Stock Option
         Agreement by and between Maxicare Health
         Plans, Inc. and Peter J. Ratican, dated
         as of February 25, 1992                      183 of 193

10.43    Stock Option Agreement by and between
         Maxicare Health Plans, Inc. and Eugene
         L. Froelich, dated as of February 25,
         1992@

10.43a   Amendment No. 1 to the Stock Option
         Agreement by and between Maxicare Health
         Plans, Inc. and Eugene L. Froelich, dated
         as of February 25, 1992###


10.43b   Amendment No. 2 to the Stock Option
         Agreement by and between Maxicare Health
         Plans, Inc. and Eugene L. Froelich, dated
         as of February 25, 1992                      185 of 193

10.44    Amended Maxicare Health Plans, Inc.
         1990 Stock Option Plan@

10.50    Stock Option Agreement by and between
         Maxicare Health Plans, Inc. and Thomas W.
         Field, Jr., dated as of April 1, 1992@@

10.51d   Employment and Indemnification Agreement
         by and between Maxicare Health Plans, Inc.
         and Robert J. Landis, dated as of January 1,
         1995@@@@

10.52    Stock Option Agreement by and between
         Maxicare Health Plans, Inc. and Robert J.
         Landis, dated as of December 5, 1990@@

10.54    Stock Option Agreement by and between
         Maxicare Health Plans, Inc. and Florence F.
         Courtright, dated as of November 5, 1993@@@

10.55    Stock Option Agreement by and between
         Maxicare Health Plans, Inc. and Vicki
         F. Perry, dated as of December 20, 1993@@@

10.56    Stock Option Agreement by and between
         Maxicare Health Plans, Inc. and Alan D.
         Bloom, dated as of December 20, 1993@@@

                           98 of 193

<PAGE>

Exhibit                                               Sequential
Number   Description                                  Page Number
-------  ----------------------------------------     -----------
10.57    Stock Option Agreement by and between
         Maxicare Health Plans, Inc. and Richard A.
         Link, dated as of December 20, 1993@@@

10.58    Stock Option Agreement by and between
         Maxicare Health Plans, Inc. and Aivars L.
         Jerumanis, dated as of December 20, 1993@@@

10.59    Stock Option Agreement by and between
         Maxicare Health Plans, Inc. and Robert J.
         Landis, dated as of December 20, 1993@@@

10.61    Stock Option Agreement by and between
         Maxicare Health Plans, Inc. and Thomas
         W. Field, Jr., dated as of December 20,
         1993@@@

10.63    Stock Option Agreement by and between
         Maxicare Health Plans, Inc. and Claude
         S. Brinegar, dated as of December 20,
         1993@@@

10.68    Lease by and between Maxicare Health Plans,
         Inc. and Transamerica Occidental Life
         Insurance Company, dated as of June 1, 1994#

10.69    Stock Option Agreement by and between
         Maxicare Health Plans, Inc. and Alan S.
         Manne dated as of January 28, 1994@@@@

10.70    Stock Option Agreement by and between
         Maxicare Health Plans, Inc. and Alan D.
         Bloom, dated as of December 8, 1994@@@@

10.71    Stock Option Agreement by and between
         Maxicare Health Plans, Inc. and Aivars L.
         Jerumanis, dated as of December 8,
         1994@@@@

10.72    Stock Option Agreement by and between
         Maxicare Health Plans, Inc. and Richard A.
         Link, dated as of December 8, 1994@@@@

10.74    Stock Option Agreement by and between
         Maxicare Health Plans, Inc. and Robert J.
         Landis, dated as of December 8,
         1994@@@@

10.75    Stock Option Agreement by and between
         Maxicare Health Plans, Inc. and Vicki F.
         Perry, dated as of December 8,
         1994@@@@

                           99 of 193

<PAGE>

Exhibit                                               Sequential
Number   Description                                  Page Number
-------  -------------------------------------------  -----------
10.76    Restricted Stock Grant Agreement by and
         between Maxicare Health Plans, Inc. and
         Peter J. Ratican, dated as of February
         27, 1995@@@@

10.77    Restricted Stock Grant Agreement by and
         between Maxicare Health Plans, Inc. and
         Eugene L. Froelich, dated as of February
         27, 1995@@@@

10.78    Maxicare Health Plans, Inc., 1995 Stock
         Option Plans##

10.78a   Amendment Number One to the Maxicare
         Health Plans, Inc. 1995 Stock Option Plan    187 of 193

10.79    Employment and Indemnification Agreement
         by and between Maxicare Health Plans, Inc.
         and Warren D. Foon, dated as of January 1,
         1995@@@@@

10.80a   Stock Option Agreement by and between
         Maxicare Health Plans, Inc. and Warren D.
         Foon, dated as of May 20, 1991@@@@@

10.80c   Stock Option Agreement by and between
         Maxicare Health Plans, Inc. and Warren D.
         Foon, dated as of December 20, 1993@@@@@

10.80d   Stock Option Agreement by and between
         Maxicare Health Plans, Inc. and Warren D.
         Foon, dated as of December 8, 1994@@@@@

10.81    Form of Stock Option Agreement relating
         to Exhibit 10.78@@@@@

10.82a   Stock Option Agreement by and between
         Maxicare Health Plans, Inc. and Peter J.
         Ratican, dated as of April 1, 1996###

10.82b   Stock Option Agreement by and between
         Maxicare Health Plans, Inc. and Eugene L.
         Froelich, dated as of April 1, 1996###

10.83    Maxicare Health Plans, Inc. Outside
         Directors 1996 Formula Stock Option
         Plan####

10.83a   Amendment Number One to the Maxicare
         Health Plans, Inc. Outside Directors
         1996 Formula Stock Option Plan               189 of 193

                           100 of 193

<PAGE>

Exhibit                                               Sequential
Number   Description                                  Page Number
-------  ----------------------------------------     -----------
10.84    Maxicare Health Plans, Inc. Senior
         Executives 1996 Stock Option Plan####

10.84a   Amendment Number One to the Maxicare
         Health Plans, Inc. Senior Executives
         1996 Stock Option Plan                       190 of 193

21       List of Subsidiaries@@@

23.1     Consent of Independent Auditors
         - Ernst & Young LLP                          191 of 193

27       Financial Data Schedule for the year
         ended December 31, 1996                      192 of 193

28.1     Notice That The Conditions to
         Effectiveness of the Plan Have Been
         Met or Waived***

28.2     Stipulation and Order Regarding Conditions
         to Effectiveness of Joint Plan of
         Reorganization***


-------------------
*     Incorporated by  reference  from  the  Company's Registration
      Statement on Form 10,  declared  effective March 18, 1991, in
      which this exhibit bore the same exhibit number.

**    Incorporated by reference from  the Company's Reports on Form
      8-K dated December 17,  1991  and  January 31, 1992, in which
      this exhibit bore the same exhibit number.

***   Incorporated by reference from  the  Company's Report on Form
      8-K dated December 5,  1990,  in  which this exhibit bore the
      same exhibit number.

@     Incorporated by reference from the Company's Annual Report on
      Form 10-K for the year ended December 31, 1991, in which this
      exhibit bore the same exhibit number.

@@    Incorporated by reference from the Company's Annual Report on
      Form 10-K for the year ended December 31, 1992, in which this
      exhibit bore the same exhibit number.

@@@   Incorporated by reference from the Company's Annual Report on
      Form 10-K for the year ended December 31, 1993, in which this
      exhibit bore the same exhibit number.

@@@@  Incorporated by reference from the Company's Annual Report on
      Form 10-K for the year ended December 31, 1994, in which this
      exhibit bore the same exhibit number.

                           101 of 193

<PAGE>

@@@@@ Incorporated by reference from the Company's Annual Report on
      Form 10-K for the year ended December 31, 1995, in which this
      exhibit bore the same exhibit number.

#     Incorporated by reference from the Company's Quarterly Report
      on Form 10-Q  for  the  quarterly  period ended September 30,
      1994, in which this exhibit bore the same exhibit number.

##    Incorporated by reference from the Company's Quarterly Report
      on Form 10-Q  for  the  quarterly  period ended September 30,
      1995, in which this exhibit bore the same exhibit number.

###   Incorporated by reference from the Company's Quarterly Report
      on Form 10-Q for the quarterly period ended June 30, 1996, in
      which this exhibit bore the same exhibit number.

####  Incorporated by reference from  the Company's Proxy Statement
      for Annual Meeting of Stockholders held on July 26, 1996.

                           102 of 193