Exhibit 10.79b

                      EMPLOYMENT AGREEMENT


        The Employment Agreement ("Agreement"), dated as of December
1, 1998, is made by and between Maxicare Health Plans, Inc., a
Delaware corporation (the "Company"), and Warren D. Foon, an
individual ("Employee").

                            RECITALS

        This Agreement is made in consideration of Employee's desire
to enter the employ or continue in the employ of the Company, and the
Company desires that employee be so employed.

        1.      Definitions.   As used in this Agreement, the
following capitalized terms shall have the following meanings, unless
otherwise expressly provided or unless the context otherwise
requires:

                (a)     "Board of Directors" means the Board of
Directors of the Company.                

                (b)     "Cause" means, as used with respect to the
involuntary termination of Employee:                     

                        (i)       Any breach by Employee of this
Agreement;                     

                        (ii)      The material or continuous failure
of Employee to perform his job duties to the Company's satisfaction,
whether by reason of his inability, refusal or otherwise;

                        (iii)     Employee's willfully causing the
Company, whether by action or inaction, to violate any state or
federal law, rule or regulation;                     

                        (iv)      The engaging by Employee in
misconduct or inaction detrimental to the Company's business or
reputation and/or which exposes the Company to liability based upon
the inaction or action(s) of Employee;
 
                        (v)       The conviction of Employee for a
felony or of a crime involving moral turpitude;

                        (vi)      Any act of dishonesty, misconduct,
disloyalty, fraud, insubordination or





<PAGE>
 misappropriation of confidential information in connection with





Employee's employment with the Company or the satisfaction of his
obligations hereunder; or

                        (vii)     Any breach or violation of the
Company's Policies and Procedures Manual (the "Policies Manual") as
in effect from time to time which would warrant termination pursuant
to the terms of such Policies Manual.

                (c)     "Incapacity" means the absence of the
Employee from his employment or the inability of Employee to perform
his essential job duties with reasonable accommodations on a full-
time basis by reason of mental or physical illness, disability or
incapacity for a period of thirty (30) consecutive days.           

        2.      Employment, Services and Duties.   The Company hereby
employs Employee as Vice President and General Manager, or such title
designation as the Company, acting through the Company's Chief
Executive Officer (the "CEO") may from time to time direct.  Employee
shall report to and be supervised by the CEO or such other person as
the CEO may designate (the "Supervisor") and shall have such duties
and responsibilities as the Supervisor may designate.

        3.      Acceptance of Employment.   Employee hereby accepts
employment and agrees to devote his full time with the Company's
business and shall not be involved in any activities whatsoever which
interfere with Employee's: (1) employment with the Company; (2)
satisfaction of Employee's obligations on behalf of the Company
pursuant to the terms of this Agreement; or (3) activities on behalf
of the Company in the discharge of his duties during the Company's
business hours.

        4.      Obligation to Other Employers.   Employee represents
that his employment with the Company does not conflict with any
obligations he may have with former employers or any other persons or
entities.  Employee specifically represents that he has not brought
to the Company (and will not bring to the Company) any materials or
documents of a former employer, or any confidential information or
property of a former employer.

        5.      Compensation.   As compensation for all services to
be rendered by Employee hereunder, the Company shall pay to Employee
a base salary at the rate of $190,000.00 per annum through December
31, 1998 and $200,000.00 per annum from January 1, 1999 through
December 31, 1999 (the "Base Salary"), with such increases and/or
bonuses as may be determined from time to time by the CEO in his sole
discretion and, if applicable, subject to

<PAGE>
 the approval of the Board of Directors.  Said Base Salary shall be





payable in bi- weekly  installments or in such other installments as
the Company may from time to time pay other similarly situated
employees.

        6.      Benefits.   In addition to the compensation provided
for in Section 5 of this Agreement, Employee shall have the right to
participate in any profit-sharing, pension, life, health and accident
insurance, or other employee benefits presently adopted or which
hereafter may be adopted by the Company in a manner comparable to
those offered or available to other employees of the Company who are
similarly situated where such plans or programs are available to all
such similarly situated employees pursuant to their terms.  Nothing
contained herein, shall require that the Company's Board of Directors
designate the Employee as a participant in any new plan or program
where the Board, in its sole discretion, chooses to designate
participants or qualifications for any new or additional program.
Except as set forth above, the Company reserves the right to add,
terminate and/or amend any existing plans, policies, programs and/or
arrangements during the term of this Agreement without any obligation
to the Employee hereunder.           Employee shall also be entitled
to twenty (20) days annual vacation time, during which time his
compensation will be paid in full.  Unused vacation days at the end
of any pay period(s) may be carried over to subsequent pay period(s),
provided that the cumulative number of vacation days accruing from
and after the date of this Agreement carried over into any subsequent
pay period shall not exceed twenty (20) days.  Employee shall not
accrue additional vacation days during any pay period once the total
number of accumulated vacation days equals twenty (20) days.
Employee shall under no circumstances be entitled to cash in lieu of
vacations days, except in the event of Employee's termination of
employment with the Company.

        7.      Expenses.   The Company shall reimburse Employee for
all reasonable travel, hotel, entertainment and other expenses
incurred by Employee in the discharge of Employee's duties hereunder,
in accordance with Company policy regarding same, only after receipt
from Employee of vouchers, receipts or other reasonable
substantiation of such expenses acceptable to the Company.

        8.      Term of Employment.   The term of this Agreement and
Employee's employment shall be for a period of three (3) years and
one month, commencing on December 1, 1998 and terminating on December
31, 2001 (the "Expiration Date"), unless otherwise extended or sooner
terminated as provided for in this Agreement.  Employee's employment
with the Company pursuant to

<PAGE>
 this Agreement shall terminate prior to the Expiration Date upon the





occurrence of any of the following events:

                (a)     The death of Employee;                

                (b)     Employee voluntarily leaves the employ of the
Company;                

                (c)     The Incapacity of Employee; 

                (d)     The Company terminates this Agreement for
Cause;                

                (e)     The Company terminates this Agreement for any
reason other than set forth in Sections 8(a), 8(c) or 8(d) hereof; or

                (f)     The appointment of a trustee for the Company
for the purpose of liquidating and winding up the Company pursuant to
Chapter 7 of the Federal Bankruptcy Code.

        9.      Compensation Upon Termination.   In the event this
Agreement is terminated pursuant to Section 8, the Company shall pay
to Employee his then current Base Salary, prorated through the
Employee's last day of employment with the Company (the "Termination
Date") and solely those additional bonuses that had been declared or
fully earned by Employee prior to such termination ("Earned
Bonuses"), but had not yet received the Earned Bonuses, and any
accrued vacation through the Termination Date pursuant to Section 6
(the "Termination Pay").  Except as set forth below, all employment
compensation and benefits shall cease as of the Termination Date.  In
addition to the foregoing:                
                (a)     In the event that such termination arises
under Section 8(a), Employee's estate shall be entitled to receive
severance compensation equal to such amount of Employee's then
current Base Salary as would have been over an additional thirty (30)
day period;

                (b)     Employee recognizes that this Agreement and
Employee's employment with the Company may be terminated at any time
by the Company prior to the Expiration Date "without cause" and
nothing contained herein shall require that the Company continue to
employ the Employee until the Expiration Date; notwithstanding the
foregoing, if prior to the Expiration Date of this Agreement or prior
to its termination pursuant to Sections 8(a) - 8(d) or 8(f) hereof or
this, this Agreement is terminated pursuant to Section 8(e) above,
the Employee shall: (y) receive the greater of either: 
<PAGE>







                        (i)       his then current Base Salary
through the Expiration Date of the Agreement or 

                        (ii)      six (6) months Base Salary when
such payments would have otherwise been paid had Employee's
employment with the Company continued (the "Severance Salary"); and
(z) be entitled to continue to receive through the Expiration Date
solely the health, dental, disability and life insurance benefits
that Employee was receiving or participating in pursuant to Section 6
immediately prior to such termination, as though such termination had
not occurred.  If the Company is unable to continue such benefits,
the Company shall obtain or reimburse Employee for all costs actually
incurred by the Employee to obtain substantially equivalent benefits
(the "Severance Benefits").  The Severance Benefits shall be provided
to Employee as and when such amounts or benefits would have been paid
to Employee had such termination not occurred until the first to
occur of: (1) the Expiration Date, (2) Employee's Death, or (3) until
such time as Employee obtains other employment which offers any of
such benefits to its employees of similar stature with the Employee.
In the event any comparable benefit obtained or available to the
Employee in his new employment is less than such Severance Benefits
being provided pursuant to this Section 9, the Company will provide
for or pay the monetary costs of obtaining such additional benefits
necessary to provide substantially similar overall benefits.  The
Severance Salary and the Severance Benefits are hereinafter
collectively referred to as the "Severance Compensation".

THE SEVERANCE COMPENSATION IN THIS SUBSECTION 9(b) SHALL BE PAID OR
MADE AVAILABLE TO EMPLOYEE AS LIQUIDATED DAMAGES FOR ALL CLAIMS
EMPLOYEE WOULD HAVE WITH RESPECT TO: (i) THE TERMINATION OF THIS
AGREEMENT OR THE TERMINATION OF EMPLOYEE'S EMPLOYMENT UPON THE
EXPIRATION OF THIS AGREEMENT; (ii) ANY COMPENSATION OR BENEFITS DUE
EMPLOYEE FROM THE COMPANY PURSUANT TO THIS AGREEMENT AND (iii) THE
INJURY TO EMPLOYEE'S REPUTATION AS A RESULT OF ANY TERMINATION OF
THIS AGREEMENT OR TERMINATION OF EMPLOYMENT UPON THE EXPIRATION OF
THIS AGREEMENT.  IN CONNECTION THEREWITH, THE PARTIES AGREE THAT IT
WOULD BE IMPRACTICAL AND EXTREMELY DIFFICULT TO FIX THE ACTUAL AMOUNT
OF SUCH DAMAGES AND CLAIMS DUE EMPLOYEE WITH RESPECT THERETO AND THAT
SUCH SEVERANCE COMPENSATION AND/OR TERMINATION PAY SHALL CONSTITUTE A
REALISTIC AND REASONABLE VALUATION OF THE DAMAGES WITH RESPECT TO
EMPLOYEE'S CLAIMS.

               ____________                    ____________
           
                (c)  Except as otherwise provided in Section 9(a) or
(b) above, all other compensation and benefits enjoyed by or

<PAGE>
 due to Employee as part of Employee's employment with Employer shall





cease as of the Termination Date; including but not limited to any
rights to office or parking space, vacation or sick pay, use of
telephones, Xeroxing or Facsimile equipment, secretarial assistance,
any unpaid bonus (other than Earned Bonuses), all benefits and/or
rights pursuant to Section 6 above and the right to receive grants of
any stock options which have not previously been granted to employee
or, except as expressly provided in any applicable stock option
agreement or plan, vesting in any stock options previously granted to
Employee which have not vested as of the Termination Date.           

                (d)     In the event Employee does not receive, on or
before the Expiration Date, an offer for a new employment agreement
but nevertheless continues as an employee of the Company after the
Expiration Date, Employee shall be thereafter deemed to be an "at
will employee" who may be terminated by the Company at any time.  In
the event Employee's employment with the Company is terminated while
Employee is an "at will employee", Employee shall be entitled to only
those severance benefits, if any, which are in accordance with the
Company's then existing Policies Manual or other written personnel
policies. Employee acknowledges and understands that in such event,
Employee will no longer be entitled to the Severance Compensation set
forth herein.

                (e)     All payments of Severance Compensation shall
be made when such payments would have been made had this Agreement
not been terminated and all Severance Benefits, Severance Salary and
Termination Pay shall be paid or provided subject to the usual
withholdings, including state and federal taxes.

        10.     Covenant Not to Compete.                

                (a)     Employee covenants and agrees that, during
Employee's employment with the Company pursuant to this Agreement,
Employee will not, directly or indirectly, own, manage, operate,
join, control or become employed by, or render any services of any
advisory nature or otherwise, or participate in the ownership,
management, operation or control of, any business which competes with
the business of the Company or any of its affiliates.

                (b)     Notwithstanding the foregoing, Employee shall
not be prevented from investing his assets in such form or manner as
will not require any services on the part of Employee in the
operation of the affairs of a company in which investments are made,
provided such company is not engaged in a business competitive to the
Company, or if it is in competition with the

<PAGE>
 Company, provided its stock is publicly traded and Employee owns





less than one percent (1%) of the outstanding stock of that company.

        11.     Confidentiality.   Employee covenants and agrees that
he will not at any time during or after the termination of his
employment by the Company reveal, divulge or make known to any
person, firm or corporation any information, knowledge or data of a
proprietary nature relating to the business of the Company or any of
its affiliates which is not or has not become generally known or
public.  Employee shall hold, in a fiduciary capacity, for the
benefit of the Company, all information, knowledge or data of a
proprietary nature, relating to or concerned with, the operations,
customers, developments, sales, business and affairs of the Company
and its affiliates which is not generally known to the public and
which is or was obtained by the Employee during his employment by the
Company.  Employee recognizes and acknowledges that all such
information, knowledge or data is a valuable and unique asset of the
Company, and accordingly he will not discuss or divulge any such
information, knowledge or data to any person, firm, partnership,
corporation or organization other than to the Company, its
affiliates, designees, assignees or successors or except as may
otherwise be required by the law, as ordered by a court or other
governmental body of competent jurisdiction, or in connection with
the business and affairs of the Company.

        12.     Equitable Remedies.   In the event of a breach or
threatened breach by Employee of any of his obligations under
Sections 10 and 11 of this Agreement, Employee acknowledges that the
Company may not have an adequate remedy at law and therefore it is
mutually agreed between Employee and the Company that, in addition to
any other remedies at law or in equity which the Company may have,
the Company shall be entitled to seek in a court of law and/or equity
a temporary and/or permanent injunction restraining Employee from any
continuing violation or breach of this Agreement.

        13.     Miscellaneous.                

                (a)     This Agreement shall be binding upon and
inure to the benefit of the Company and any successor of the Company.
Except as set forth in Section 8(f) above, this Agreement shall not
be terminated by the voluntary or involuntary dissolution of the
Company or by any merger, reorganization or other transaction in
which the Company is not the surviving or resulting corporation or
upon any transfer of all or substantially all of the assets of the
Company in the event of any such merger, or transfer of assets.  The
provisions of this Agreement shall be binding upon and shall inure to
the benefit of
<PAGE>
 the surviving business entity or the business entity to which such





assets shall be transferred in the same manner and to the same extent
that the Company would be required to perform it if no such
transaction had taken place.

                        Neither this Agreement nor any rights arising
hereunder may be assigned or pledged by Employee.

                (b)     Except as otherwise provided by law or
elsewhere herein, in the event of an act of force majeure, as
hereinafter defined, during the term hereof which event continues for
a period of no less than fifteen (15) days, the Company shall be
entitled to suspend this Agreement for the duration of such event of
force majeure.  In such event, during the duration of the event of
force majeure the Company shall be relieved of its obligations to the
Employee pursuant to Sections 5 and 6; except for the continuation of
any health, life or disability insurance coverage.  For the purposes
hereof, "force majeure" shall be defined as the occurrence of one or
more of the following events which adversely affects the business,
operations or financial condition of the Company:                     

                        (i)       any act commonly understood to be
of force majeure which materially and adversely affects the Company's
business and operations, including but not limited to, the Company
having sustained a material loss, whether or not insured, by reason
of fire, earthquake, flood, epidemic, explosion, accident, calamity
or other act of God;                     
                        (ii)      any strike or labor dispute or
court or government action, order or decree;

                        (iii)     a banking moratorium having been
declared by federal or state authorities;

                        (iv)      An outbreak of major armed
conflict, blockade, embargo, or other international hostilities or
restraints or orders of civic, civil defense, or military authorities
or other national or international calamity having occurred;             
                        (v)       any act of public enemy, riot or
civil disturbance or threat thereof;                     

                        (vi)      "Y2K" problems, as hereinafter
defined, with respect to the Company, its vendors or customers or the
economy or government generally.  "Y2K" problems shall mean any
problem arising out of or relating to the inability of computer
systems, computer technology, or embedded computer chips failing to
operate or failing to operate properly as a result of

<PAGE>
 the change in date from "1999" to "2000", including but not limited





to the failure to properly recognize any such date; or                     
                        (vii)     a pending or threatened legal or
governmental proceeding or action relating generally to the Company's
business, or a notification having been received by the Company of
the threat of any such proceeding or action, which could materially
adversely affect the Company.                

                (c)      Except as expressly provided herein, this
Agreement contains the entire understanding between the parties with
respect to the subject matter hereof, and may not be modified,
altered or amended except by an instrument in writing signed by the
parties hereto. This Agreement supersedes all prior agreements of the
parties with respect to the subject matter hereof, including but not
limited to the Employment Agreement dated as of January 1, 1998
between the Company and Employee.                
                (d)     This Agreement shall be construed in
accordance with the laws of the State of California applicable to
agreements wholly made and to be performed entirely within such state
and without regard to the conflict of law principles thereof.                

                (e)     Nothing in this Agreement is intended to
require or shall be construed as requiring the Company to do or fail
to do any act in violation of applicable law. The Company's inability
pursuant to court order to perform its obligations under this
Agreement shall not constitute a breach of this Agreement.  If any
provision of this Agreement is invalid or unenforceable, the
remainder of this Agreement shall nevertheless remain in full force
and effect.  If any provision is held invalid or unenforceable with
respect to particular circumstances, it shall, nevertheless, remain
in full force and effect in all other circumstances.                

                (f)     With the exception of the Company's right to
enforce the provisions found in Sections 10 or 11 of this Agreement
pursuant to Section 12 hereof, any and all disputes arising from
Employee's employment with or termination from the Company including
but not limited to any claim for unlawful retaliation, wrongful
termination of employment, violation of public policy or unlawful
discrimination or harassment because of race, color, sex, national
origin, religion, age, physical or mental disability or condition,
marital status, sexual orientation or other legally protected
characteristic shall be resolved by final and binding arbitration
before a single arbitrator.  EXCEPT AS OTHERWISE PROVIDED IN THIS
SECTION, THE PARTIES AGREE THAT IF A DISPUTE OR CLAIM OF ANY KIND
ARISES
<PAGE>
 BETWEEN THEM, THEY AGREE TO WAIVE ANY RIGHTS EACH MAY HAVE TO A JURY





OR COURT TRIAL.

                        Any party hereto electing to commence an
action shall give written notice to the other parties hereto of such
election.  The arbitrator shall be limited to an award of monetary
damages and shall conduct the arbitration in accordance with the
California Rules of Evidence. The dispute shall be settled by
arbitration to take place in Los Angeles County, California, in
accordance with the then rules of the American Arbitration
Association or its successor.  The award of such arbitrator may be
confirmed or enforced in any court of competent jurisdiction. The
costs and expenses of the arbitrator including the attorney's fees
and costs of each of the parties, shall be apportioned between the
parties by such arbitrator based upon such arbitrator's determination
of the merits of their respective positions.  Nothing contained in
this Section shall in any way be construed to modify, expand or
otherwise alter the rights and obligations of the Company and
Employee contained elsewhere in this Agreement.                

                (g)     Any notice to the Company required or
permitted hereunder shall be given in writing to the Company, either
personally, by messenger, courier or otherwise, telex, telecopier or,
if by mail, by registered or certified mail, return receipt
requested, postage prepaid, duly addressed to the Secretary of the
Company at its then principal place of business. Any such notice to
Employee shall be given to the Employee in a like manner, and if
mailed shall be addressed to Employee at Employee's home address then
shown in the files of the Company.  For the purpose of determining
compliance with any time limit herein, a notice shall be deemed given
on the fifth day following the postmarked date, if mailed, or the
date of delivery if delivered personally, by telex or telecopier.       

                (h)     Employee acknowledges that: (i) he has been
advised by the Company that this Agreement affects his legal rights
and to seek the advice of his legal counsel prior to executing it and
(ii) he has had the opportunity to consult with his own legal counsel
in connection with the negotiations of the terms of this Agreement,
his rights with respect hereto and the execution hereof.                

                (i)     A waiver by either party of any term or
condition of this Agreement or any breach thereof, in any one
instance, shall not be deemed or construed to be a waiver of such
term or condition or of any subsequent breach thereof.

                (j)     The section and subsection headings

<PAGE>
 contained in this Agreement are solely for convenience and shall not





be considered in its interpretation.                

                (k)     This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.



IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first written above.                         
                        COMPANY:                               
                                  MAXICARE HEALTH PLANS, INC.
                                  a Delaware corporation


                                  By:   /s/ Peter J. Ratican  
                                          Peter J. Ratican
                                      Chairman, President and
                                      Chief Executive Officer


                                  By:    /s/ Alan D. Bloom    
                                      Alan D. Bloom, Secretary


                        EMPLOYEE:


                                  By:    /s/ Warren D. Foon   
                                          Warren D. Foon