SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

Form 10-Q

[X] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the quarterly period ended
June 30, 1996 or

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

Commission file number: 0-12024
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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
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(Address of principal executive offices) (Zip Code)

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

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 whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13, or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.

Yes [ X ] No [ ]

Exhibit Index Page 15 of 119
Page 1 of 119

Common Stock, $.01 par value - 17,539,318 shares outstanding as of
August 9, 1996, of which 622,358 shares were 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.

PART I: FINANCIAL INFORMATION
---------------------
Item 1: Financial Statements
--------------------

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

June 30, December 31,
1996 1995
----------- ---------
CURRENT ASSETS (Unaudited)

Cash and cash equivalents................................. $ 27,932 $ 49,170
Marketable securities..................................... 63,298 49,659
Accounts receivable, net.................................. 32,655 32,946
Deferred tax asset........................................ 14,252 14,000
Prepaid expenses.......................................... 2,759 1,195
Other current assets...................................... 319 294
--------- ---------
TOTAL CURRENT ASSETS.................................... 141,215 147,264
--------- ---------
PROPERTY AND EQUIPMENT
Leasehold improvements.................................... 5,441 5,441
Furniture and equipment................................... 18,855 18,849
--------- ---------
24,296 24,290
Less accumulated depreciation and amortization.......... 22,346 21,755
--------- ---------
NET PROPERTY AND EQUIPMENT.............................. 1,950 2,535
--------- ---------
LONG-TERM ASSETS
Long-term receivables..................................... 156 200
Statutory deposits........................................ 13,481 12,593
Intangible assets, net.................................... 315 244
--------- ---------
TOTAL LONG-TERM ASSETS.................................. 13,952 13,037
--------- ---------

TOTAL ASSETS............................................ $ 157,117 $ 162,836
========= =========
CURRENT LIABILITIES
Estimated claims and incentives payable................... 37,212 $ 46,232
Accounts payable.......................................... 456 689
Deferred income........................................... 1,717 5,272
Accrued salary expense.................................... 3,336 3,296
Payable to disbursing agent............................... 6,248 6,248
Other current liabilities................................. 4,829 5,239
--------- ---------
TOTAL CURRENT LIABILITIES............................... 53,798 66,976

LONG-TERM LIABILITIES....................................... 807 1,155
--------- ---------
TOTAL LIABILITIES....................................... 54,605 68,131
--------- ---------

SHAREHOLDERS' EQUITY
Common stock, $.01 par value - 40,000 shares authorized,
1996 - 17,539 shares and 1995 - 17,420 shares issued
and outstanding......................................... 175 174
Additional paid-in capital................................ 249,237 247,690
Accumulated deficit....................................... (146,900) (153,159)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY.............................. 102,512 94,705
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.............. $ 157,117 $ 162,836
========= =========

See notes to consolidated financial statements.

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

For the three For the six
months ended months ended
June 30, June 30,
------------------ ------------------
1996 1995 1996 1995
-------- -------- -------- --------

OPERATING REVENUES................................................... $134,573 $113,692 $266,339 $226,047
-------- -------- -------- --------
OPERATING EXPENSES
Physician services................................................ 53,576 44,904 106,157 89,126
Hospital services................................................. 46,487 34,594 88,456 68,195
Outpatient services............................................... 20,348 16,197 38,534 32,122
Other health care services........................................ 3,009 2,875 6,063 6,326
-------- -------- -------- --------
TOTAL HEALTH CARE EXPENSES...................................... 123,420 98,570 239,210 195,769

Marketing, general and administrative expenses.................... 11,817 10,591 23,263 21,165
Depreciation and amortization..................................... 329 301 675 595
-------- -------- -------- --------
TOTAL OPERATING EXPENSES........................................ 135,566 109,462 263,148 217,529
-------- -------- -------- --------
INCOME (LOSS) FROM OPERATIONS........................................ (993) 4,230 3,191 8,518

Investment income, net of interest expense........................ 1,516 1,679 3,068 3,020
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES........................................... 523 5,909 6,259 11,538

INCOME TAX PROVISION................................................. 1,012 1,953
-------- -------- -------- --------
NET INCOME........................................................... $ 523 $ 4,897 $ 6,259 $ 9,585
======== ======== ======== ========

NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE:

Primary
Primary Earnings per Common Share................................. $ .03 $ .27 $ .34 $ .61
======== ======== ======== ========
Weighted average number of common and common
equivalent shares outstanding................................... 18,406 18,092 18,446 15,758
======== ======== ======== ========
Fully Diluted
Fully Diluted Earnings per Common Share........................... $ .03 $ .27 $ .34 $ .53
======== ======== ======== ========
Weighted average number of common and common
equivalent shares outstanding................................... 18,406 18,092 18,446 18,076
======== ======== ======== ========

See notes to consolidated financial statements.

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

For the six months ended June 30,
1996 1995
--------- --------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income....................................................... $ 6,259 $ 9,585
Adjustments to reconcile net income to net cash used for
operating activities:
Depreciation and amortization.................................. 675 595
Benefit from deferred taxes.................................... (252)
Amortization of restricted stock............................... 349 233
Changes in assets and liabilities:
(Increase) decrease in accounts receivable................... 291 (3,223)
Decrease in estimated claims and incentives payable.......... (9,020) (10,531)
Increase (decrease) in deferred income....................... (3,555) 2,148
Changes in other miscellaneous assets and liabilities........ (2,388) 845
-------- --------
Net cash used for operating activities........................... (7,641) (348)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Dispositions of property and equipment......................... 4
Purchases of property and equipment............................ (41) (173)
Increase in statutory deposits................................. (888) (726)
Proceeds from sales and maturities of marketable securities.... 21,131 34,578
Purchases of marketable securities............................. (34,770) (34,250)
Decrease in long-term receivables.............................. 44 39
-------- --------
Net cash used for investing activities........................... (14,524) (528)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on capital lease obligations.......................... (272) (80)
Stock options exercised........................................ 1,199 845
Redemption of preferred stock.................................. (525)
-------- --------
Net cash provided by financing activities........................ 927 240
-------- --------
Net decrease in cash and cash equivalents........................ (21,238) (636)
Cash and cash equivalents at beginning of period................. 49,170 37,858
-------- --------
Cash and cash equivalents at end of period....................... $ 27,932 $ 37,222
======== ========
Supplemental disclosures of cash flow information:
Cash paid during the period for -
Interest..................................................... $ 65 $ 21
Income taxes................................................. $ 263 $ 1,670

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

See notes to consolidated financial statements.

MAXICARE HEALTH PLANS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES:

Basis of Presentation
---------------------

Maxicare Health Plans, Inc., a Delaware corporation ("MHP"), is a
holding company which owns various subsidiaries, primarily health
maintenance organizations ("HMOs"). The accompanying unaudited
consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for
interim financial information. In the opinion of management, all
adjustments considered necessary for a fair presentation, which
consist solely of normal recurring adjustments, have been
included. All significant inter-company balances and
transactions have been eliminated.

For further information on MHP and subsidiaries (collectively the
"Company") refer to the consolidated financial statements and
accompanying footnotes included in the Company's annual report on
Form 10-K as filed with the Securities and Exchange Commission
for the year ended December 31, 1995.

Capital Stock and Net Income Per Common and Common Equivalent
-------------------------------------------------------------
Share
-----

The Company concluded the redemption of its Series A Cumulative
Convertible Preferred Stock ("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 three and six month
periods ended June 30, 1995.

Primary 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 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.

Item 2: Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations
-----------------------------------

Results of Operations

Maxicare Health Plans, Inc. and subsidiaries (the "Company")
reported net income of $.5 million for the three months ended June
30, 1996, compared to $4.9 million for the same three month period
in 1995. Net income per common share on a fully diluted basis was
$.03 for the second quarter of 1996, compared to $.27 for 1995.

For the three months ended June 30, 1996, the Company reported
operating revenues of $134.6 million, an increase of 18% or $20.9
million when compared to the same period in 1995. Operating
revenues increased as a result of a 25% increase in the Company's
membership over the prior year period. A majority of the increase
resulted from a doubling of membership in the Company's Medicaid
and Medicare lines of business primarily in Indiana and
California. The remaining increase resulted from a 15% increase
in commercial membership primarily in California and Indiana,
offset in part by a decrease in the average per member per month
("PMPM") commercial premium.

The increase in operating revenues for the second quarter of 1996
was more than offset by a $24.8 million increase in health care
expenses. This increase in health care expenses was in part a
result of a $5.0 million charge for unanticipated health care
claims costs primarily related to the Illinois and Carolinas
health plans, where the Company assumes greater risk for claims
costs as compared to its other health plans. The remaining
increase principally results from growth in the Company's Medicaid
and Medicare lines of business, both of which have a higher
medical loss ratio (health care expenses as a percentage of
operating revenues) than the Company's commercial line of
business.

Marketing, general and administrative ("MG&A") expenses for the
second quarter of 1996 increased $1.2 million to $11.8 million as
compared to the second quarter of 1995. However, MG&A expenses as
a percentage of operating revenues decreased to 8.8% for the three
months ended June 30, 1996 as compared to 9.3% for the second
quarter of 1995 primarily as a result of revenue growth in the
Company's Medicaid line of business.

Net investment income for the second quarter of 1996 decreased by
$200,000 to $1.5 million, as compared to 1995, due to lower
interest rates partially offset by greater cash and investment
balances.

The Company reported a $32,000 provision for income taxes for the
three months ended June 30, 1996 and an offsetting income tax
benefit of $32,000 due to the Company increasing its deferred tax
asset. The Company reported a $1.0 million provision for income
taxes for the three months ended June 30, 1995.

Operating revenues for the first six months of 1996 increased
17.8% to $266.3 million from $226.0 million for the same period in
1995 primarily due to a 24% membership increase in the Company's
Medicaid, Medicare and commercial lines of business; offset in
part by a 5.2% decline in the average premium PMPM primarily as a
result of the growth in the lower premium PMPM Medicaid line of
business. Total health care expenses increased $43.4 million for
the first six months of 1996 as compared to the same period in
1995 as a result of the increase in membership and the $5.0
million charge recorded in the second quarter of 1996. MG&A
expenses increased $2.1 million for the six months ended June 30,
1996, but decreased as a percentage of operating revenues to 8.7%
from 9.4%. The Company reported net income of $6.3 million for
the six months ended June 30, 1996 as compared to $9.6 million for
the same period in 1995.

Liquidity and Capital Resources

Certain of MHP's operating subsidiaries are subject to state
regulations which require compliance with certain statutory
deposit, reserve, 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 June
30, 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". Total
Restricted Net Assets of these operating subsidiaries were $38.8
million at June 30, 1996, with deposit requirements and
limitations imposed by state regulations on the distribution of
dividends representing $12.9 million and $18.6 million of the
Restricted Net Assets, respectively, and net worth requirements in
excess of deposit requirements and dividend limitations
representing the remaining $7.3 million. The Company's total
Restricted Net Assets at June 30, 1996 were $39.1 million. In
addition to the $23.9 million in cash, cash equivalents and
marketable securities held by MHP, approximately $13.3 million
could be considered available to transfer to MHP from operating
subsidiaries.

All of MHP's operational subsidiaries are direct subsidiaries of
MHP. All of the Company's HMOs are federally qualified and
licensed in the states where they operate. Subsequent to the
close of the Company's fiscal 1996 second quarter, in July 1996
the North Carolina Department of Insurance and the South Carolina
Department of Insurance approved the expansion of the Company's
North Carolina HMO into the state of South Carolina through its
acquisition of the existing membership, contracts and net assets
of the Company's South Carolina HMO. As a result of this
approval, the Company's North Carolina HMO is licensed to conduct
business in both the states of North Carolina and South Carolina.
Prior to such approval, the operations of the Company's South
Carolina HMO were under Bankruptcy Court jurisdiction.

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
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 2.6 and less than $.9 million of long-term
liabilities at June 30, 1996, the Company does not believe that it
needs additional working capital at this time. Although the
Company believes that it would be able to raise additional working
capital through either an equity infusion or borrowings if it so
desired, the Company can not state with any degree of certainty at
this time whether additional equity capital or working capital
would be available to the Company, and if available, would be at
terms and conditions acceptable to the Company.

PART II: OTHER INFORMATION
-----------------
Item 1: Legal Proceedings
-----------------

The information contained in "Part I, Item 3. Legal Proceedings" of
the Company's 1995 Annual Report on Form 10-K is hereby
incorporated by reference and the following information updates the
information contained in the relevant subparts thereof.

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. On
February 27, 1991, the Company filed a petition against the DPW
with the Pennsylvania Board of Claims (the "Claims 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 Claims 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
consisting of Penn Health primary care physician providers (the
"PCP Class") against DPW to secure payment directly from the DPW
for pre-petition services rendered to HealthPass members. Pursuant
to an order of the Claims Board, the actions were set for trial in
two phases; a liability phase and a damages phase.

Following trial before the Claims Board in July 1994 of contractual
issues pertaining to DPW's liability the Claims Board issued an
order on December 2, 1994 on the liability phase which found 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. Trial on the
parties' respective damages claims concluded on November 30, 1995.
All post trial briefing has been completed and the parties are
waiting for the Claims Board to issue its ruling on the damages
phase and to enter a judgment in the Board Action. The Company
believes that its damage claims are meritorious and that it will
prevail in the Board Action.

On June 7 and 19, 1996 the Company and Penn Health filed
complaints with the United States Bankruptcy Court for the Central
District of California (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
11

recovery of payments (plus accrued interest) made by the DPW, 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"), after confirmation of the Plan, 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)); (Maxicare Health Plans, Inc. and Penn Health
Corporation v. Faezeh Behjat et al. (Case No. AD96-01668)). The
Company believes that its claims against the defendants 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.

b. OTHER LITIGATION

The Company is a defendant in a number of other lawsuits arising in
the ordinary course from the operations of its HMOs, including
cases in which the plaintiffs assert claims against the Company or
third parties that might assert 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. The
Company does not believe that an adverse determination in any one
or more of these cases would have a material, adverse effect on the
Company's business and operations.

Item 2: Change in Securities
--------------------

None.

Item 3: Defaults Upon Senior Securities
-------------------------------

None.

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

None.

Item 5: Other Information
-----------------

None.

Item 6: Exhibits and Reports on Form 8-K
--------------------------------

(a) Exhibits
--------

Exhibit 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

Exhibit 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

Exhibit 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.

Exhibit 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.

Exhibit 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.

Exhibit 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.

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

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

Exhibit 27. Financial Data Schedule

(b) Reports on Form 8-K
-------------------

None.

SIGNATURES

Pursuant to the requirements 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.

MAXICARE HEALTH PLANS, INC.
---------------------------
(Registrant)

August 12, 1996 /s/ Eugene L. Froelich
---------------------------
Eugene L. Froelich
Chief Financial Officer and
Executive Vice President -
Finance and Administration

INDEX TO EXHIBITS

Exhibit Sequential
Number Description Page Number
------ ----------------------------------------- -----------
10.3d Amended and Restated Employment and 16 of 119
Indemnification Agreement by and between
Maxicare Health Plans, Inc. and Peter J.
Ratican, dated as of April 1, 1996

10.4d Amended and Restated Employment and 51 of 119
Indemnification Agreement by and between
Maxicare Health Plans, Inc. and Eugene L.
Froelich, dated as of April 1, 1996

10.14a Amendment No. 1 to the Stock Option 86 of 119
Agreement by and between Maxicare Health
Plans, Inc. and Peter J. Ratican, dated
as of December 5, 1990

10.15a Amendment No. 1 to the Stock Option 90 of 119
Agreement by and between Maxicare Health
Plans, Inc. and Eugene L. Froelich, dated
as of December 5, 1990

10.42a Amendment No. 1 to the Stock Option 94 of 119
Agreement by and between Maxicare Health
Plans, Inc. and Peter J. Ratican, dated
as of February 25, 1992

10.43a Amendment No. 1 to the Stock Option 97 of 119
Agreement by and between Maxicare Health
Plans, Inc. and Eugene L. Froelich, dated
as of February 25, 1992

10.82a Stock Option Agreement by and between 100 of 119
Maxicare Health Plans, Inc. and Peter J.
Ratican, dated as of April 1, 1996

10.82b Stock Option Agreement by and between 109 of 119
Maxicare Health Plans, Inc. and Eugene L.
Froelich, dated as of April 1, 1996

27 Financial Data Schedule 118 of 119