FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 14, 2000

REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

MAXICARE HEALTH PLANS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 95-3615709
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)

1149 SOUTH BROADWAY STREET
LOS ANGELES, CALIFORNIA 90015
(213) 765-2000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

RICHARD A. LINK
CHIEF OPERATING OFFICER
CHIEF FINANCIAL OFFICER
MAXICARE HEALTH PLANS, INC.
1149 SOUTH BROADWAY STREET
LOS ANGELES, CALIFORNIA 90015
(213) 765-2000
(NAME AND ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)

COPY TO:

BARRY L. BURTEN, ESQ. AARON A. GRUNFELD, ESQ.
JEFFER, MANGELS, BUTLER & MARMARO LLP RESCH POLSTER ALPERT & BERGER LLP
2121 AVENUE OF THE STARS, 10TH FLOOR 10390 SANTA MONICA BOULEVARD,
LOS ANGELES, CALIFORNIA 90067 LOS ANGELES, CALIFORNIA 90025
(310) 203-8080 (310) 277-8300
FAX (310) 203-0567 FAX (310) 552-3209

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]

If the registrant elects to deliver its latest annual report to
securityholders, or a complete and legible facsimile thereof, pursuant to Item
11(a)(1) of this Form, check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ____________

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ____________

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ____________

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE

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TITLE OF AMOUNT TO BE PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) AGGREGATE OFFERING PRICE(2) REGISTRATION FEE

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Common Stock, par value $.01 per share...... 28,088,072(3) $28,088,072 $7,415.25
Common Stock, par value $.01 per share...... 1,000,000(4) $ 1,660,000 $ 438.24(5)
Common Stock, par value $.01 per share...... 800,000(6) $ 1,328,000 $ 300.58(7)
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(1) This Registration Statement also includes an indeterminable number of
additional shares of common stock that may become issuable (i) pursuant to
the anti-dilution provisions of the underwriter's warrant, and (ii) by
reason of the fact that fractional shares will be rounded upward in the
rights offering.

(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

(3) Consists of 28,088,072 shares to be offered by the Registrant pursuant to
this partially underwritten rights offering.

(4) Consists of 1,000,000 shares issuable upon exercise of the underwriter's
warrant.

(5) Pursuant to Rule 457(b) of the Securities Act of 1933, the registration fee
is calculated on the basis of (i) the greater of the average of the high and
low prices of the common stock as reported on the Nasdaq National Market as
of July 11, 2000 or (ii) $1.50 per share, the exercise price of the
underwriter's warrant. In this case it is $1.66 per share.

(6) Consists of 800,000 shares which are being registered on behalf of a selling
shareholder.

(7) Pursuant to Rule 457(c) of the Securities Act of 1933, the registration fee
is calculated on the basis of the average of the high and low prices of the
common stock as reported on the Nasdaq National Market as of July 11, 2000.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SECTION 8(a), MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION, DATED JULY 14, 2000

PROSPECTUS

MAXICARE HEALTH PLANS, INC.

29,088,072 SHARES OF COMMON STOCK

$1.00 PER SHARE

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We are conducting a rights offering to our shareholders of 28,088,072
shares. Under this offering each shareholder of record as of the close of
business on September 14, 2000 will receive one non-transferable subscription
right to purchase one and one-half shares of our common stock at $1.00 per share
for every share of common stock owned by the shareholder at such time.

Shareholders may exercise the subscription rights for a period of 30 days
beginning on , 2000 and ending at 5:00 p.m., New York City time, on
, 2000.

MDB Capital Group, LLC, as a standby underwriter, has agreed to purchase up
to 15 million shares not subscribed to by shareholders in the rights offering.
We have agreed to sell to the standby underwriter a non-transferable warrant to
purchase up to an additional one million shares of common stock at an exercise
price of $1.50 per share. Our sale of up to one million shares of common stock
issuable to the standby underwriter upon the exercise of its warrant is also
covered by this prospectus.

Our common stock is quoted on the Nasdaq National Market System under the
trading symbol MAXI. On , 2000, the closing price of a share of our
common stock on Nasdaq was $ .

INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING
ON PAGE 6.

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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED THAT
THIS PROSPECTUS IS COMPLETE OR ACCURATE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

PER SHARE TOTAL
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Offering price.............................................. $1.00 $28,088,072
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Underwriting discounts and commissions...................... $ -0- $ -0-
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Proceeds, before expenses and fees to MDB Capital........... $1.00 $28,088,072
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MDB CAPITAL GROUP, LLC

The date of this prospectus is , 2000.
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PROSPECTUS SUMMARY

THE COMPANY

We are Maxicare Health Plans, Inc., a Delaware corporation, a holding
company which owns various operating subsidiaries, primarily in the field of
managed health care. We own and operate three health maintenance organizations
("HMOs") in California, Indiana and Louisiana and have a combined enrollment of
approximately 446,000 as of June 30, 2000. In June 2000, we entered into a
definitive agreement for the sale of the Louisiana HMO, which had approximately
13,000 members as of June 30, 2000. The completion of this transaction is
expected to occur during the third quarter of 2000 and is subject to regulatory
and other customary approvals and conditions. We also operate Maxicare Life and
Health Insurance Company and HealthAmerica Corporation. Through these
subsidiaries, we offer an array of employee benefit packages, including group
HMO, Medicaid and Medicare HMO, preferred provider organization, point of
service, group life and accidental death and dismemberment insurance,
administrative services only programs, wellness programs and other services and
products.

Through our HMO operations we arrange for the delivery of comprehensive
health care services to our members for a predetermined, prepaid fee. We
generally provide 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.

We believe 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, with predictable
out-of-pocket expense and 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.

Our executive offices are located at 1149 South Broadway Street, Los
Angeles, California 90015, and our telephone number is (213) 765-2000. Our Web
site address is www.maxicare.com. The information contained on our Web site is
not part of this prospectus.
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THE RIGHTS OFFERING

SECURITIES OFFERED......... 28,088,072 shares of common stock, par value $.01
per share, at a subscription price of $1.00 per
share.

SHARES OUTSTANDING/
AUTHORIZED............... As of the record date of September 14, 2000, we had
shares of common stock issued and
outstanding. After the rights offering and MDB
Capital Group, LLC's purchase of up to $15 million
worth of any shares not subscribed to by
shareholders in the rights offering, we will have a
minimum of 33,725,381, and a maximum of 46,813,453
shares issued and outstanding. We have 80,000,000
shares of common stock authorized for issuance.

GRANT OF SUBSCRIPTION
RIGHTS..................... All shareholders of record as of September 14, 2000
will be granted the non-transferable right to
purchase one and one-half shares of our common
stock at $1.00 per share for every share of common
stock held by them as of this date. We will not
issue fractional shares. We will round the rights
upward to the nearest whole share. The rights are
non-transferable. This rights offering will remain
open for a 30 day period from , 2000
to , 2000.

STANDBY UNDERWRITING....... MDB Capital Group, LLC has agreed to purchase, at
$1.00 per share, up to 15 million shares not
subscribed to by shareholders in the rights
offering. We have agreed to sell to MDB Capital
Group, LLC a non-transferable warrant to purchase
up to an additional one million shares of our
common stock at $1.50 per share.

USE OF PROCEEDS............ We intend to use substantially all the proceeds of
the rights offering as follows: the first $6 to $8
million to increase the capitalization in our
operating subsidiaries, the next $4 to $6 million
to fund infrastructure enhancements, and the
remainder for working capital and general corporate
purposes (which may include additional investments
in our subsidiaries and infrastructure
enhancements).
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SUMMARY CONSOLIDATED FINANCIAL DATA

The following summary consolidated financial data are qualified by
reference to, and should be read in conjunction with, our Consolidated Financial
Statements and the Notes thereto incorporated by reference in this prospectus
from our Annual Report on Form 10-K for the year ended December 31, 1999 and our
Quarterly Report on Form 10-Q for the three months ended March 31, 2000. The
summary consolidated financial data for each of the years ended December 31,
1999, 1998 and 1997 are derived from our audited Consolidated Financial
Statements. The summary consolidated financial data as of March 31, 2000 and
1999 and for the three months ended March 31, 2000 and March 31, 1999 are
unaudited, but, in the opinion of management, included all adjustments
(consisting only of normal recurring accruals) necessary for a fair presentation
of the results of operations for those periods. The results of operations for
the three months ended March 31, 2000 are not necessarily indicative of the
results to be expected for the full fiscal year.

THREE MONTHS ENDED FOR THE YEARS ENDED
MARCH 31, DECEMBER 31,
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2000 1999 1999 1998 1997
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(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AND MEMBERSHIP
DATA)

Revenues
Premiums.............................. $183,473 $174,013 $704,996 $727,220 $658,080
Investment income..................... 1,199 945 3,777 5,403 7,481
Other income.......................... 247 4,210 4,865 2,530 5,743
-------- -------- -------- -------- --------
Total Revenues................... 184,919 179,168 713,638 735,153 671,304
-------- -------- -------- -------- --------
Expenses
Health care expenses.................. 167,784 163,119 652,274 684,362 630,869
Marketing, general and administrative
expenses........................... 16,766 15,008 63,955 61,068 55,765
Depreciation and amortization......... 319 221 1,173 756 751
Loss contracts, divestiture costs,
litigation, management settlement
and other charges(1)............... 8,500 8,500 16,500 9,000
-------- -------- -------- -------- --------
Total Expenses................... 184,869 186,848 725,902 762,686 696,385
-------- -------- -------- -------- --------
Income (Loss) From Operations........... 50 (7,680) (12,264) (27,533) (25,081)
Income Tax Benefit......................
-------- -------- -------- -------- --------
Net Income (Loss)....................... $ 50 $ (7,680) $(12,264) $(27,533) $(25,081)
======== ======== ======== ======== ========
Net Income (Loss) Per Common Share:
Basic:
Basic earnings (loss) per common
share.............................. $ .00 $ (.43) $ (.68) $ (1.54) $ (1.40)
======== ======== ======== ======== ========
Weighted average number of common
shares outstanding................. 17,925 17,925 17,925 17,928 17,897
Diluted:
Diluted earnings (loss) per common
share.............................. $ .00 $ (.43) $ (.68) $ (1.54) $ (1.40)
======== ======== ======== ======== ========
Weighted average number of common and
common dilutive potential shares
outstanding........................ 17,925 17,925 17,925 17,928 17,897

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AT MARCH 31, AT DECEMBER 31,
------------------- ------------------------------
2000 1999 1999 1998 1997
-------- -------- -------- -------- --------
(AMOUNTS IN THOUSANDS EXCEPT FOR MEMBERSHIP DATA)

BALANCE SHEET DATA:
Total assets.......................... $145,145 $128,000 $133,215 $136,254 $167,422
Total indebtedness(2)................. $101,975 $ 80,143 $ 90,059 $ 83,298 $ 86,386
Shareholders' equity.................. $ 43,170 $ 47,857 $ 43,156 $ 52,956 $ 81,036

MEMBERSHIP DATA:
Number of members..................... 451,800 482,800 466,600 512,000 514,000

NOTES TO SUMMARY CONSOLIDATED FINANCIAL DATA

The summary consolidated financial data should be read in conjunction with
our Quarterly Report on Form 10-Q for the three months ended March 31, 2000 and
"Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations" and "Item 8. Financial Statements and Supplementary Data" of our
Annual Report on Form 10-K for the year ended December 31, 1999.

(1) A $3 million charge for loss contracts related to our Carolinas commercial
line of business and a $5.5 million charge for management settlement costs
were recorded in the first quarter of 1999. A $10 million charge for loss
contracts and divestiture costs and a $6.5 million charge for litigation,
provider insolvency/impairment, and an increase to the loss contracts and
divestiture costs reserve were recorded in the second and fourth quarters of
1998, respectively. A $6 million litigation charge was recorded in the first
quarter of 1997 as a result of a ruling by the Commonwealth of Pennsylvania
Board of Claims denying us recovery on our receivable of $5 million due us
from the Pennsylvania Department of Public Welfare in connection with the
operation of a Medicaid managed care program from 1986 through 1989 by one
of our subsidiaries, and related litigation costs. A $3 million management
restructuring charge was recorded in the fourth quarter of 1997 for
termination expenses primarily related to the settlement of certain
obligations pursuant to the former chief financial officer's employment
agreement.

(2) Includes long-term liabilities of $2.8 million and $3.1 million at March 31,
2000 and 1999, respectively. Includes long-term liabilities of $3.0 million,
$.6 million and $.2 million, at December 31, 1999, 1998 and 1997,
respectively.
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RISK FACTORS

You should carefully consider the following risks, in addition to the other
information contained in this prospectus, before making any investment decision.
The risks and uncertainties described below are the most significant factors
that make an investment in our common stock speculative and risky. As a result
of any of the risks we encounter, our business, financial condition and results
of operations could be materially adversely affected. In addition, any of these
adverse effects could cause the trading price of our common stock to decline and
you may correspondingly lose all or some portion of your investment in us.

FUTURE COSTS OF HEALTH CARE SERVICES THAT WE PROVIDE TO OUR MEMBERS MAY RISE
FASTER THAN THE RELATED PREMIUMS WE RECEIVE.

Commercial premium rates for managed care plans have generally increased
over the past year and recent months; however, if costs of health care services
rise and we are unable to adequately increase commercial premium rates, our
margins will shrink and have a corresponding adverse impact on operating
results. In addition, for the quarter ended March 31, 2000, approximately 41% of
our premium revenues were derived from governmental programs, including Medicare
and Medicaid. The government generally fixes these premium rates and we are
unable or limited in our ability to adjust these rates based on anticipated
costs. Recent legislation regarding Medicare reimbursement has substantially
limited premium rate increases as compared to increases granted in prior years.
As a result, the costs of our governmental programs could exceed the related
premiums we receive from these programs. In addition, although we recently
announced our withdrawal, effective as of January 1, 2001, from certain Medicare
markets which we do not consider profitable, this withdrawal will not affect the
losses which we may have on this business during this current year.

HIGHER THAN ESTIMATED HEALTH CARE COSTS MAY ADVERSELY AFFECT OUR BUSINESS.

We generally set our rates annually and in advance based on estimates of
future health care costs over the related premium period. However, many factors
may adversely impact our ability to estimate and manage future health care costs
including increased utilization, high dollar claims, inflation, catastrophic
events, epidemics, new mandated benefits, new technologies and health care
practices, inability to secure cost effective provider compensation
arrangements, and the inherent variability of estimated claims reserves. Because
our rates are set in advance, we generally cannot adjust if health care costs
turn out higher than our estimates. Consequently, our results of operations may
be adversely affected. In addition, we are impacted more than certain of our
competitors because our relatively small size exacerbates the effect of greater
than anticipated high dollar claims.

PHARMACEUTICAL COSTS CONTINUE TO RISE AT A RATE IN EXCESS OF OUR ABILITY TO BE
REIMBURSED.

Prescription drug costs continue to rise at a rate in excess of most other
health care services and at a rate in excess of our ability to be reimbursed
through increased rates. Although we have implemented strategies to seek to
mitigate this cost trend there can be no assurance that we will be able to
effectively manage this problem or successfully recoup the cost increases.

THE RISK OF ADVERSE VARIATIONS IN OUR CLAIMS RESERVES HAS INCREASED.

Our claims reserves are estimates of incurred health care costs based upon
various assumptions and environmental factors. The accuracy of these estimates
may be affected by variables such as changes in the rate of inflation/medical
costs, the processing of claims, provider contract arrangements, the regulatory
environment and other factors. Given the inherent variability of our estimates,
the actual development of our reserves could be materially different from
amounts provided. During the past year we have assumed the risk for a much
larger percentage of our

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members as a result of a trend away from capitated arrangements with our medical
providers; accordingly, the risks we face with respect to material variations in
our claims reserves have increased.

OUR INABILITY TO OBTAIN COST EFFECTIVE CONTRACTS WITH PROVIDERS MAY RESULT IN
HIGHER HEALTH CARE COSTS AND LOSS OF MEMBERSHIP.

Our marketability and profitability depends, in large part, on our ability
to attract and contract on a cost effective basis with hospitals, medical
groups, physicians and other provider contracting entities. In selected markets,
certain providers, particularly hospitals, physicians/hospital organizations or
multi-specialty physician groups may have significant market positions and/or
compete directly with us. In the past certain providers have refused to contract
with us or utilized their market position to place us at a competitive
disadvantage. To the extent this continues to occur, our ability to market our
managed care products and control our costs could be adversely affected
resulting in higher health care costs and loss of membership.

THE FINANCIAL INSTABILITY OF OUR PROVIDERS MAY EXPOSE US TO LIABILITY FOR UNPAID
CLAIMS, LOSS OF MEMBERSHIP AND INCREASED HEALTH CARE COSTS.

We contract with providers and other provider contracting entities
primarily through capitation arrangements. We pay the provider a fixed dollar
amount per member per month and the provider accepts the financial risk of the
frequency and cost of member utilization of services. The inability of
contracted provider entities to properly manage costs under capitation
arrangements can result in financial instability and insolvency of those
providers resulting in the termination of their relationship with us, and
subjecting us to possible liability for unpaid claims and loss of membership.
During the past few years several of our significant providers in both
California and Indiana became insolvent or declared bankruptcy. The termination
of a capitated provider arrangement may also result in members selecting other
providers with whom we may not have as favorable contractual arrangements
resulting in increased health care costs.

IT IS DIFFICULT FOR US TO COMPETE IN THE HMO BUSINESS BECAUSE OUR MARKET SHARE
IS RELATIVELY LOW.

We operate in an environment, especially in California, where many of our
principal competitors enjoy significantly greater market share and greater
capital resources. As a result of competitive pressures, we have been and may
continue to be adversely affected in our ability to retain our customer base,
limited in our premium pricing flexibility and adversely affected in our ability
to maintain or improve operating margins.

OUR GEOGRAPHIC AND LINES OF BUSINESS CONCENTRATIONS SUBJECT US TO INCREASED
BUSINESS RISK.

Our commercial and governmental business is concentrated in California and
Indiana which accounted for 96% of our premium revenues for the quarter ended
March 31, 2000. Changes in regulatory, market or health care provider conditions
in either of these states could have a material adverse effect on our business,
financial condition and operating results.

Our Medicaid and Medicare lines of business are subject to our ongoing
ability to secure contracts with the appropriate governmental entities.
Governmental programs are also subject to extensive federal and state
regulation. Our Medicaid and Medicare premium revenues represented approximately
25% and 16%, respectively, of our total premium revenues for the quarter ended
March 31, 2000. Our failure to retain one or more of our governmental contracts
could have a material adverse effect on our business and operations.

Our 10 largest commercial employer groups accounted for approximately 34%
of our commercial membership as of June 30, 2000. Our largest commercial
employer group, the state of Indiana,

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accounted for approximately 10% of our commercial membership and approximately
23% of the Indiana HMO's commercial membership as of June 30, 2000. The loss of
one or more of our largest commercial employer groups could have a material
adverse effect on our business and operations.

WE MAY BE ADVERSELY AFFECTED BY COMPLICATIONS IN THE ENHANCEMENT OF OUR
MANAGEMENT INFORMATION SYSTEMS.

Our business operations are significantly dependent on the functionality
and effectiveness of our management information systems. In addition, our
current management information systems are based on a highly capitated business
model which we are in the process of shifting towards a shared risk model. We
are presently assessing installation of significant system enhancements and/or
conversions including internet-based systems. Any significant service
disruptions resulting from the implementation of these initiatives and/or
conversions could have a material adverse impact on our business processes,
customer and provider relationships, results of operations and financial
condition. Further, any complications in adjusting our management information
systems to deal with our increasingly non-capitated business model may place
additional burdens on us.

WE ARE SUBJECT TO EXTENSIVE FEDERAL AND STATE LAWS AND REGULATION AND PENDING
LEGISLATION.

The health care industry is subject to extensive laws and regulations,
including, but not limited to, requirements related to licensing, policy
benefits design, member disclosure and enrollment, cash reserves, net worth and
restrictions on dividending. In addition, we are subject to various reviews and
audits regarding compliance with applicable laws and regulations. These laws and
regulations are subject to frequent changes and future changes related to
pending legislation or regulation could force us to change the way we do
business resulting in a material adverse impact on our operations. Since
approximately 41% of our premium revenues for the quarter ended March 31, 2000
were derived from governmental contracts, we are especially vulnerable to
changes in laws or regulations concerning these programs.

IN THE FUTURE, THE STATES IN WHICH WE DO BUSINESS MAY ADOPT MORE STRINGENT
MINIMUM CAPITALIZATION REQUIREMENTS.

The managed care industry is subject to various state regulations including
financial requirements related to minimum net worth or capitalization
requirements. The National Association of Insurance Commissioners has proposed
that states adopt risk-based capital standards that, if implemented, would
generally require higher minimum capitalization limits for health care coverage
provided by HMOs and other risk bearing entities. To date, neither California
nor Indiana has adopted these standards for HMOs; however, if these standards
were adopted (or similar standards requiring increased capitalization), we may
not be able to meet these capitalization limits without securing additional
capital resources.

COSTS ASSOCIATED WITH LITIGATION AND OTHER ACTIONS MAY RESULT IN LOSSES.

We are subject to a variety of legal actions related to our business
including claims for failure to pay for, provide or arrange for health care,
provider disputes, breach of contract and other actions the ultimate outcome of
which is not yet certain. Adverse results in one or more of these proceedings
may result in liabilities that could have a material adverse effect on our
operations, financial condition and future prospects.

The HMO industry has been subject to a number of separate class action
lawsuits against certain select national HMOs which may cause or force changes
in business practices of the HMO industry.

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WE HAVE EXPERIENCED RECENT OPERATING LOSSES AND OUR RETURN TO PROFITABILITY
DEPENDS ON THE SUCCESSFUL IMPLEMENTATION OF OPERATING INITIATIVES AND OTHER
FACTORS.

We incurred losses during our fiscal years ended December 31, 1997, 1998
and 1999 of $25.1 million, $27.5 million and $12.3 million, respectively and
anticipate incurring additional losses this fiscal year. We are undertaking a
variety of operating initiatives designed to improve our market position,
strengthen our medical management, enhance our administration and control over
claims processing and payment, and improve other critical business processes. We
have recently added senior management talent to our organization to direct these
operating initiatives and have added staff resources to complement these
initiatives. We are also pursuing the implementation of significant information
systems enhancements and/or conversions including internet-based systems. There
is no guarantee; however, that we will be able to successfully implement these
initiatives or if implemented they will result in our return to profitability.

THIS RIGHTS OFFERING MAY JEOPARDIZE OUR UTILIZATION OF SIGNIFICANT TAX BENEFITS.

As of March 31, 2000, we had approximately $407.5 million of federal net
operating tax losses that we can use to offset future federal taxable income and
which expire in the years 2003 through 2019. However, our issuance of common
stock in this offering may prevent us from fully utilizing these benefits
because it increases the likelihood of a statutory "ownership change" as defined
by the Internal Revenue Code of 1986, as amended. If an ownership change occurs,
the tax code limits the amount of tax benefits that we can use in a year to an
amount based on the fair market value of our stock multiplied by a long-term tax
exempt rate. This amount is significantly less than $407.5 million. This
limitation may cause some of our tax benefits to expire unutilized. Therefore,
if we were successful in generating future taxable income, we may have to pay
more income taxes or pay such taxes sooner than if our tax benefits were not
limited.

In light of the potential for these adverse tax consequences our board has
recommended that our shareholders approve at our 2000 annual meeting of
shareholders an amendment to our charter that restricts transfers of our capital
stock that could trigger the limitations of the tax code. This amendment will
not take effect until after this rights offering is completed.

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USE OF PROCEEDS

The net proceeds that we expect to receive from this rights offering are
estimated to be a minimum of $14.7 million and up to a maximum of $26.6 million
after deducting the fee to our standby underwriter of one million dollars and
other estimated offering expenses.

The principal purpose of this rights offering is to alleviate our
potentially serious liquidity and regulatory capital adequacy problems, in
particular at the parent company level. We intend to use the net proceeds from
this rights offering as follows: first, to immediately increase and strengthen
the capitalization of the California HMO and Indiana HMO subsidiaries and
Maxicare Life and Health Insurance Company, next, to fund infrastructure
enhancements over the next two years in support of our operating initiatives,
which include expenditures for information system enhancements and/or
conversions, marketing and advertising campaigns, and increased staffing
resources, and finally, the remaining proceeds for general corporate and working
capital purposes which may include additional investment in capitalization of
the operating subsidiaries and infrastructure enhancements. The table below
reflects the use of net proceeds in the event we receive the minimum of $14.7
million and the maximum of $26.6 million:

MINIMUM MAXIMUM
----------- -----------

Capital infusion to operating subsidiaries.................. $ 6,000,000 $ 8,000,000
Infrastructure expenditures................................. 4,000,000 6,000,000
General corporate and working capital....................... 4,700,000 12,600,000
----------- -----------
$14,700,000 $26,600,000
=========== ===========

DETERMINATION OF OFFERING PRICE

Our board decided to set a $1.00 per share subscription price after
considering several factors, including the potential 150% increase in the number
of outstanding shares in the event the rights offering is fully subscribed. Our
shares are traded on the Nasdaq National Market. In determining the per share
subscription price, we took into account the prices at which recent trades have
taken place in our shares. We also considered the potential that existing
shareholders may wish to purchase additional shares of common stock from us and
the multiples of book value at which shares of similarly situated companies are
trading. The $1.00 per share subscription price should not be considered an
indication of our actual value or of the value of our common stock. We have
neither sought, nor obtained, any valuation opinion from outside financial
advisors or investment bankers.

PLAN OF DISTRIBUTION

DESCRIPTION OF THE RIGHTS OFFERING

We are granting to our shareholders as of the close of business on
September 14, 2000, non-transferable subscription rights to purchase one and
one-half shares of our newly issued common stock, at a price of $1.00 per share,
for each share held on September 14, 2000. If all shareholders fully exercise
their subscription rights, we will issue an aggregate of approximately
28,088,072 shares. We will not issue fractional shares. We will round
subscription rights up to the next whole share. The subscription rights are not
transferable, except that the assignment by a record or nominee owner of shares
to the beneficial owner will be permitted to the extent allowable under
applicable state securities laws. A shareholder who does not participate in the
rights offering will experience ownership dilution. Our officers and directors,
in their capacity as shareholders, will have the same right to purchase shares
in the rights offering as other shareholders.

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All of our continuing directors and certain of our executive officers,
including our chief executive officer, Paul R. Dupee, Jr., who collectively own
827,956 shares, or approximately 4.4% of our outstanding common stock, currently
intend to exercise their subscription rights. To the extent that the voting
power of our directors and executive officers increases as a result of the
rights offering, it will be more difficult for the remaining shareholders to
replace or remove the directors and executive officers.

Shareholders cannot revoke their rights subscription certificates once
submitted. Our board reserves the right to postpone or to cancel the rights
offering at any time prior to its consummation if it determines that this
postponement or cancellation is in our best interests. If the rights offering is
fully subscribed, we expect to raise proceeds of approximately $28.1 million
before applicable costs.

HOW TO SUBSCRIBE

You may subscribe to purchase shares by completing and signing the rights
subscription certificate which accompanies this prospectus and mailing or
delivering it to American Stock Transfer & Trust Company, the subscription
agent, together with payment in full for all shares subscribed for. To be
accepted, we must receive your rights subscription certificate before the
expiration of the rights offering. Shareholders cannot revoke their rights
subscription certificates once submitted to the subscription agent.

You must pay the full subscription price when you return the rights
subscription certificate. In the event you pay an amount which is less than that
required to purchase the number of shares subscribed for, we will issue only the
number of shares for which payment is received. You should make checks payable
to: American Stock Transfer & Trust Company. You should mail checks and
completed rights subscription certificates to the subscription agent at:
American Stock Transfer & Trust Company, 40 Wall Street, 48th Floor, New York,
New York 10005.

DELIVERY OF SHARE CERTIFICATES

As soon as practicable following completion of the rights offering, the
subscription agent will mail certificates for shares to shareholders whose
rights subscription certificates have been accepted.

ESCROW OF FUNDS AND ACCEPTANCE OF SUBSCRIPTIONS

The subscription agent will deposit all subscription funds received in an
interest bearing account. All funds received will be held in this account until
the rights offering is completed. Any interest earned will be applied first to
pay the expenses of the subscription agent and then remitted to us. In addition
to any particular subscriptions we do not accept because they are incomplete or
otherwise not properly submitted, we may elect to accept or reject all of the
subscriptions in this rights offering.

STANDBY UNDERWRITING COMMITMENT

The Company has entered into a Standby Underwriting Agreement with MDB
Capital Group, LLC. MDB Capital will provide a firm commitment to purchase from
us, at $1.00 per share, up to $15 million worth of any shares not subscribed to
by shareholders in the rights offering. Upon completion of this rights offering,
we will sell to MDB Capital for a purchase price of $100, a warrant to purchase
up to 1,000,000 shares of our common stock at an exercise price of $1.50 per
share. The warrant will be exercisable beginning one year from the date of this
prospectus and for six years thereafter.

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Subject to the terms and conditions of the Standby Underwriting Agreement,
MDB Capital has agreed to provide a standby underwriting commitment for the
number of shares of common stock set forth below:

STANDBY UNDERWRITER NUMBER OF SHARES
------------------- ----------------

MDB Capital Group, LLC................................. Up to 15,000,000

The Standby Underwriting Agreement provides that the obligations of MDB
Capital are subject to various conditions precedent, including the absence of
any material adverse change in our business and the receipt of certificates,
opinions and letters from our counsel and independent public accountants. The
nature of the standby underwriting commits MDB Capital to purchase and pay for
up to 15 million unsubscribed shares of common stock.

We have been advised by MDB Capital that it proposes to offer the shares of
common stock directly to the public at $1.00 per share. MDB Capital may pay to
selected dealers a concession of not more than $ per share.

STANDBY UNDERWRITER'S COMPENSATION

We have agreed to pay all expenses and costs incurred by MDB Capital in
connection with its standby underwriting, including legal expenses.

We have agreed to issue to MDB Capital, at the closing of the rights
offering, a non-transferable warrant to purchase up to 1,000,000 shares of
common stock at an exercise price per share of $1.50. The warrant is exercisable
one year from the date of this prospectus and for six years thereafter.

MDB Capital will have no voting, dividend or other shareholder rights under
the underwriter's warrant until the warrant is exercised. The terms of the
warrant were established as the result of negotiations between us and MDB
Capital. If the warrant is exercised MDB Capital may realize additional
compensation. By its terms, the warrant will be restricted from sale, transfer,
assignment or hypothecation, except to persons that are officers or partners of
any NASD member participating in the rights offering. The number of shares
covered by the warrant and the exercise price are subject to adjustment to
prevent dilution. In addition, we have granted both demand and piggy-back
registration rights to the holder of the warrant to register the warrant and the
underlying common stock under the Securities Act.

Upon completion of this rights offering we will deliver to MDB Capital:

- A fee of $1.0 million; and

- A warrant to purchase up to 1,000,000 shares of common stock at $1.50 per
share.

MDB Capital will not receive any commissions nor will it receive a
non-accountable expense allowance.

PURPOSE OF THE RIGHTS OFFERING

Completion of this rights offering will enable us to raise up to
approximately $28.1 million (before the costs of the rights offering and the
costs of the standby underwriting). The primary purpose of the rights offering
and standby underwriting is to alleviate potentially serious liquidity and
capital adequacy concerns. We are a holding company and currently own three
health maintenance organizations ("HMOs") licensed in California, Indiana, and
Louisiana and Maxicare Life and Health Insurance Company ("Maxicare Life"). Our
HMOs and Maxicare Life are subject to state regulations which require compliance
with certain statutory deposit, dividend distribution and net worth
requirements. To the extent the operating HMOs and Maxicare Life must comply
with these regulations, they may not have the financial flexibility to transfer
funds to us at the parent company

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level. As a result of operating losses and regulatory requirements and
restrictions, the amount of our cash generally available to fund our working
capital and operational requirements, including cash we hold and cash held by
our operating subsidiaries available for transfer to us, has diminished from
$46.6 million as of December 31, 1996, to $1.5 million as of March 31, 2000.
This lack of available cash at the parent company level has created increased
liquidity problems and operational and capital adequacy concerns which we hope
to alleviate through this rights offering. Our inability to complete this rights
offering and raise the expected proceeds would potentially leave us without
adequate working capital which could materially impair our business and
operations.

In June, 2000, we sold 800,000 shares of common stock, at $1.25 per share,
in a private placement to Meespierson Cayman Limited, as trustee of Sofaer
Funds/SCI Global Hedge Fund. Although this financing gives us some additional
liquidity, the proceeds are insufficient to enable us to retain a sufficient
amount of cash and capital resources at the parent company level for working
capital requirements, funding our infrastructure and capital improvement
requirements, in particular the funding of improvements to our information
technology capabilities, and funding of regulatory capital requirements of the
HMOs and Maxicare Life to support ongoing business growth.

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

We have summarized below material United States income tax consequences of
the rights offering to the holders of our common stock upon the distribution of
the subscription rights and to the holders of the subscription rights upon their
exercise.

This summary is based on provisions of the tax code, existing and proposed
U.S. Treasury regulations and administrative and judicial interpretations, all
as of the date of the prospectus and all of which are subject to change,
possibly on a retroactive basis.

This summary is limited to those who have held the common stock, and will
hold the subscription rights and any shares acquired upon the exercise of
subscription rights as "capital assets" within the meaning of section 1221 of
the tax code. This summary does not address all of the tax consequences that may
be relevant to holders in light of their personal circumstances, or to holders
who are subject to special rules; such as banks and other financial
institutions, broker-dealers, real estate investment trusts, regulated
investment companies, insurance companies, tax-exempt organizations and foreign
taxpayers. This summary does not include any description of the tax laws of any
state, local or non-U.S. government that may be applicable to a shareholder.

WE URGE SHAREHOLDERS TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE
PARTICULAR U.S. FEDERAL INCOME AND ESTATE TAX CONSEQUENCES TO THEM OF THIS
RIGHTS OFFERING, AS WELL AS THE TAX CONSEQUENCES UNDER STATE, LOCAL, NON-U.S.
AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN TAX LAWS.

Distribution of Subscription Rights. Shareholders will not recognize
taxable income for federal income tax purposes upon distribution of the
subscription rights.

Shareholder Basis and Holding Period of the Subscription Rights. Except as
provided in the following sentence, the basis of the subscription rights
received by a shareholder as a distribution with respect to such shareholder's
common stock will be zero. If, however, either the fair market value of the
subscription rights on their date of issuance is 15% or more of the fair market
value on the date of issuance of the common stock with respect to which they are
received or the shareholder properly elects, in his or her federal income tax
return for the taxable year in which the subscription rights are received, to
allocate part of the basis of this common stock to the subscription rights, then
upon exercise of the subscription rights, the shareholder's basis in this common
stock will be allocated

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between the common stock and the subscription rights in proportion to the fair
market values of each on the date of issuance.

The holding period of a shareholder with respect to the subscription rights
received as a distribution on the shareholder's common stock will include the
shareholder's holding period for the common stock with respect to which the
subscription rights were distributed.

Lapse of the Subscription Rights. Shareholders who allow the subscription
rights received by them in this offering to lapse will not recognize any gain or
loss, and no adjustment will be made to the basis of the common stock, if any,
they own.

Exercise of the Subscription Rights; Basis and Holding Period of the Common
Stock. Shareholders will not recognize any gain or loss upon the exercise of
subscription rights. The basis of the shares acquired through exercise of the
subscription rights will be equal to the sum of the subscription price and the
shareholder's basis in the subscription rights, if any. The holding period for
the shares acquired through exercise of the subscription rights will begin on
the date the subscription rights are exercised.

Sale of Shares. The sale of shares will result in the recognition of gain
or loss to the shareholder in an amount equal to the difference between the
amount realized and the shareholder's basis in the shares. Gain or loss upon the
sale of the shares will be long-term capital gain or loss if the holding period
for the shares is more than one year.

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DESCRIPTION OF SECURITIES TO BE REGISTERED

COMMON STOCK

We are currently authorized to issue 40 million shares of common stock, par
value $0.01 per share. At our 2000 annual meeting of shareholders we are asking
our shareholders to approve an amendment to our certificate of incorporation
increasing the number of authorized shares of common stock to 80 million.
Approval of this amendment is a prerequisite to our going forward with the
rights offering. As of , 2000 we had 18,725,381 shares of our
common stock outstanding. After completion of the rights offering and the
purchase and resale by MDB Capital of up to 15 million of any shares not
subscribed to by shareholders in the rights offering, we will have a minimum of
33,725,381 shares, and a maximum of 46,813,453 shares of common stock
outstanding.

RESTRICTIONS ON TRANSFER OF OUR COMMON STOCK

At the 2000 annual meeting, our shareholders will also be asked to approve
an amendment to our certificate of incorporation that prohibits transfer of our
capital stock, unless approved by our board, to the extent the transfer would
cause the ownership interest of the transferee or any other person to equal 5%
or more of our fair market value; or increase the ownership interest of the
transferee or any other person where such transferee's or other person's
ownership interest equalled 5% or more of our fair market value before the
transfer. This amendment will take effect after consummation of this rights
offering and will pose no barrier to the issuance of common stock in the rights
offering. The purpose of this certificate of incorporation amendment is to allow
us to minimize the chance of an "ownership change" as defined by the tax code in
order to preserve our significant accrued tax benefits.

Although it was not principally intended for this purpose, this amendment
could have an anti-takeover effect by prohibiting shareholders from increasing
their ownership interest to 5% or more and prohibiting any increase in the
ownership interest of shareholders already holding 5% or more of our fair market
value. These limitations could enable our board to render more difficult or
discourage a hostile transaction to take control of us. The presence of these
limitations could also discourage unsolicited takeover attempts, thereby
limiting the opportunity for our shareholders to realize a higher price for
their shares than would be generally available in the public markets. Our board
is not aware of any attempt, or contemplated attempt, to acquire control of us,
and this proposal is not being presented with the intent that it be utilized as
a type of anti-takeover device.

The amendment is also not intended to supercede or terminate our
shareholders rights plan. Our shareholders rights plan does not prohibit
transfer of our common stock; rather it is an anti-takeover device triggered by
certain acquisitions of our common stock. Because the restrictions on transfer
imposed by the charter amendment may be waived at our board's discretion, if we
are faced with a hostile transaction to take control of us, our board may choose
to permit only the shareholder rights plan to operate and not the restrictions
imposed by the amendment.

SHAREHOLDERS RIGHTS PLAN

In February 1998, our board adopted the shareholders rights plan and
declared a dividend distribution of one preferred share purchase right for each
outstanding share of common stock to shareholders of record on March 16, 1998.
Each share of common stock issued after that date, including the shares of
common stock being offered in this prospectus, until the designated distribution
date as set forth in the shareholders rights plan and, in certain circumstances,
shares of common stock issued after the distribution date, include a preferred
share purchase right. Except as set forth below, each preferred share purchase
right, when it becomes exercisable, entitles the registered holder to purchase
from us one five-hundredth of a share of our Series B Preferred Stock,

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$0.01 par value, at a price of $45.00 per one five-hundredth of a preferred
share, subject to adjustment.

The description and terms of the shareholders rights plan are set forth in
a Rights Agreement, dated as of February 24, 1998, as amended on October 9, 1998
and June 6, 2000, with American Stock Transfer & Trust Company, as rights agent.

Initially, the preferred share purchase rights will be attached to all
certificates representing common stock then outstanding, and no separate
certificates representing the preferred share purchase rights will be
distributed. The rights agreement provides that the preferred share purchase
rights will separate from the common stock and become exercisable upon the
distribution date, which is the earliest to occur of:

- the date of a public announcement that, without the prior consent of a
majority of the disinterested directors, a person or group of affiliated
or associated persons has acquired beneficial ownership of 5% or more of
our outstanding common stock, except pursuant to a permitted offer, or
owning 5% or more of our outstanding common stock acquires any additional
common stock; or

- 10 days or such later date as the board may determine following the
commencement or announcement of an intention to make a tender or exchange
offer, the consummation of which would result in a person or as set forth
above, effectuating a transaction as described in the preceding item.

Upon exercise, each holder of a preferred share purchase right will
thereafter have the right to receive common stock or one five-hundredth of a
share of preferred shares or, in certain circumstances, other securities of ours
having a value, immediately prior to such triggering event, equal to two times
the exercise price of the preferred share purchase right. Notwithstanding the
foregoing, following the occurrence of one of the events described above, all
preferred share purchase rights that are, or under certain circumstances
specified in the rights agreement were, beneficially owned by an acquiring
person, which is defined as any person or group acquiring beneficial ownership
of 5% of our stock or any of their affiliates or associates, will be null and
void.

Any holder that had held in excess of 5% of the common stock as of June 6,
2000 has been "grandfathered" with respect to its then position. Disinterested
directors are members of the board who are not officers or employees, acquiring
persons or their affiliates, or any person proposed or nominated as a director
by an acquiring person and certain other persons.

The preferred share purchase rights will also become exercisable if any of
the following occur:

- We consolidate with, or merge into, an acquiring person or certain of the
acquiring person's affiliates, or

- Certain affiliates of an acquiring person or any other entity, if all
holders of common stock are not treated alike in such transaction,
consolidate with, or merge into us, other than certain reorganization
transactions, or

- We sell or otherwise transfer 50% or more of our assets or earning power
to certain affiliates of an acquiring person or to any other entity, if
all holders of common stock are not treated alike in such transaction.

Upon exercise as provided immediately above, proper provision shall be made
so that each holder of a preferred share purchase right, except preferred share
purchase rights which previously have been voided as set forth below, shall have
the right to receive, common shares of the acquiring or surviving company or, in
the event there is more than one acquiring company, the acquiring

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company receiving the greatest portion of the assets or earning power
transferred, having a value equal to two times the exercise price of the
preferred share purchase right.

The purchase price payable, and the number of preferred shares, common
stock or other securities issuable upon exercise of the preferred share purchase
rights are subject to adjustment from time to time to prevent dilution upon
certain events.

Preferred shares purchasable upon exercise of the preferred share purchase
rights will not be redeemable, except at our election, for common stock. Each
preferred share will be entitled to a dividend per share of 500 times the
dividend declared per share of common stock. In the event of liquidation, the
holders of the preferred shares will be entitled, after the payment of any
liquidation preference on any other series of preferred stock, to $100 per
share, plus the holders of the preferred shares and the holders of the common
stock will share the remaining assets in the ratio of 500 to 1, as adjusted, for
each preferred share and share of common stock so held, respectively. Finally,
in the event of any merger, consolidation or other transaction in which common
stock is exchanged, each preferred share will be entitled to receive 500 times
the amount received per share of common stock. These rights are protected by
customary antidilution provisions.

At any time after a person becomes an acquiring person and prior to the
acquisition by such person or group of 50% or more of the common stock, the
board, with the approval of a majority of the disinterested directors, may
exchange the preferred share purchase rights, other than the preferred share
purchase rights owned by the acquiring person or certain of its associates,
which shall have become void, at an exchange ratio of one share of common stock
per preferred share purchase right, subject to adjustment. The board can
substitute one five-hundredths of a preferred share for some or all of the
common stock per preferred share purchase right.

At any time prior to the earlier to occur of a person's becoming an
acquiring person or the expiration of the preferred share purchase rights, and
under certain other circumstances, we may redeem the preferred share purchase
rights in whole, but not in part, at a price of $.01 per preferred share
purchase right.

Additionally, subsequent to the date of public announcement by a person or
group that they are an acquiring person, we may redeem the then outstanding
preferred share purchase rights in whole, but not in part, at a price of $.01
per preferred share purchase right. This redemption must be in connection with a
merger or other business combination transaction or series of transactions
involving us in which all holders of common stock are treated alike but not
involving an acquiring person or its affiliates or associates. This redemption
right will not exist for 180 days following the date of public announcement by
the acquiring person under certain circumstances.

All of the provisions of the rights agreement may be amended by the board,
with the approval of a majority of the disinterested directors, prior to the
distribution date. After the distribution date, the provisions of the rights
agreement may be amended by the board in order to cure any ambiguity, defect or
inconsistency, to make changes which do not adversely affect the interests of
holders of preferred share purchase rights, excluding the interests of any
acquiring person, or, subject to certain limitations, to shorten or lengthen any
time period under the rights agreement.

Until a preferred share purchase right is exercised, the holder of the
right, as such, will have no rights as a shareholder, including, without
limitation, the right to vote or to receive dividends. While the distribution of
the preferred share purchase rights will not be taxable to our shareholders of
the, shareholders may, depending upon the circumstances, recognize taxable
income should the preferred share purchase rights become exercisable or upon the
occurrence of certain events thereafter.

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ANTI-TAKEOVER PROVISIONS

Because we are incorporated under the laws of the state of Delaware, we are
subject to the anti-takeover provisions of Section 203 of the Delaware General
Corporation Law. In general, the statute prohibits a publicly-held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless the business
combination is approved in a prescribed manner. For purposes of Section 203, a
"business combination" includes a merger, asset sale or other transaction
resulting in a financial benefit to an interested stockholder. For purposes of
Section 203, an "interested stockholder" is a person who, together with
affiliates and associates, owns, or within three years prior, did own, 15
percent or more of the corporation's voting capital stock.

The provisions of our shareholders rights plan and Delaware law are
intended to encourage potential acquirers to negotiate with us and to allow the
board the opportunity to consider alternative proposals in the interest of
maximizing shareholder value. Such provisions, and the restrictive charter
amendment described above, however, may also have the effect of discouraging
acquisition proposals or delaying or preventing a change in control, which may
have an adverse effect on our stock price.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock is American Stock
Transfer & Trust Company.

LEGAL MATTERS

The legality of the securities in this rights offering has been passed upon
for us by Jeffer, Mangels, Butler & Marmaro LLP, Los Angeles, California. Resch
Polster Alpert & Berger LLP, Los Angeles, California will pass upon certain
legal matters in connection with the standby underwriting for MDB Capital Group,
LLC.

EXPERTS

The consolidated financial statements of Maxicare Health Plans, Inc.
appearing in Maxicare Health Plans, Inc.'s Annual Report (Form 10-K) for the
year ended December 31, 1999, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report therein and incorporated
herein by reference. Such consolidated financial statements are incorporated
herein by reference in reliance upon such report given on the authority of such
firm as experts in accounting and auditing.

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WHERE YOU CAN FIND MORE INFORMATION

We are required to file annual, quarterly and special reports, proxy
statements and other information with the SEC. Our filings are available to the
public over the Internet at the SEC's home page located at http://www.sec.gov or
you may read and copy any document at the SEC Public Reference Rooms located at:

405 Fifth Street, N.W., Room 1024 Washington, D.C. 20549-1004;

CitiCorp Center 500 W. Madison Street, Suite 1400, Chicago, Illinois
60661; and

Seven World Trade Center 13th Floor New York, New York 10048

Please call the SEC at 1-800-732-0330 for more information about the public
reference rooms and requesting documents.

Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2000, and

Our Annual Report on Form 10-K for the year ended December 31, 1999.

We are delivering with this prospectus a copy of our Annual Report on Form
10-K for the year ended December 31, 1999 and our Quarterly Report on Form 10-Q
for the quarter ended March 31, 2000. You may request a copy of any other
filings incorporated in this prospectus by reference at no cost, by writing or
telephoning us at the following address:

Maxicare Health Plans, Inc.
1149 South Broadway Street
Los Angeles, CA 90015
(213) 765-2000

You may also direct your requests via e-mail to jwhite@Maxicare.com.

Prospective investors may rely only on the information contained in this
prospectus. We have not authorized anyone to provide prospective investors with
different or additional information. This prospectus is not an offer to sell nor
is it seeking an offer to buy these securities in any jurisdiction where the
offer or sale is not permitted. The information contained in this prospectus is
correct only as of the date of this prospectus, regardless of the time of the
delivery of this prospectus or any sale of these securities.

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

PROSPECTIVE INVESTORS MAY RELY ONLY ON THE INFORMATION CONTAINED IN THIS
PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE PROSPECTIVE INVESTORS WITH
DIFFERENT OR ADDITIONAL INFORMATION. THIS PROSPECTUS IS NOT AN OFFER TO SELL NOR
IS IT SEEKING AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE
OFFER OR SALE IS NOT PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS
CORRECT ONLY AS OF THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF THE
DELIVERY OF THIS PROSPECTUS OR ANY SALE OF THESE SECURITIES.

NO ACTION IS BEING TAKEN IN ANY JURISDICTION OUTSIDE THE U.S. TO PERMIT A
PUBLIC OFFERING OF THE COMMON STOCK OR POSSESSION OR DISTRIBUTION OF THIS
PROSPECTUS IN ANY OF THESE JURISDICTIONS. PERSONS WHO COME INTO POSSESSION OF
THIS PROSPECTUS IN JURISDICTIONS OUTSIDE THE U.S. AND CANADA ARE REQUIRED TO
INFORM THEMSELVES ABOUT AND TO OBSERVE THE RESTRICTIONS OF THAT JURISDICTION
RELATED TO THIS OFFERING AND THE DISTRIBUTION OF THIS PROSPECTUS.

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

TABLE OF CONTENTS

PAGE
----

Prospectus Summary.................... 2
Risk Factors.......................... 6
Use of Proceeds....................... 10
Determination of Offering Price....... 10
Plan of Distribution.................. 10
Description of Securities to be
Registered.......................... 15
Legal Matters......................... 18
Experts............................... 18
Where You Can Find More Information... 19

UNTIL , 2000 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS THAT BUY, SELL OR TRADE THESE SHARES OF COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------

MAXICARE
HEALTH PLANS, INC.

29,088,072 SHARES OF COMMON STOCK

$1.00 PER SHARE
------------------------

PROSPECTUS
------------------------
, 2000

- ------------------------------------------------------
- ------------------------------------------------------
22

SUBJECT TO COMPLETION, DATED JULY 14, 2000

PROSPECTUS

MAXICARE HEALTH PLANS, INC.

800,000 SHARES OF COMMON STOCK

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

This prospectus covers the reoffer and resale by a selling shareholder of
Maxicare Health Plans, Inc. of 800,000 shares of common stock of Maxicare Health
Plans, Inc.

The common stock is quoted on The Nasdaq National Market System under the
trading symbol MAXI.

The common stock may be offered for sale from time to time in the market or
in privately negotiated transactions. Maxicare Health Plans, Inc. will not
receive any proceeds from the sale of these shares of common stock.

INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING
ON PAGE 5.

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

The date of this prospectus is , 2000.
23

PROSPECTUS SUMMARY

THE COMPANY

We are Maxicare Health Plans, Inc., a Delaware corporation, a holding
company which owns various operating subsidiaries, primarily in the field of
managed health care. We own and operate three health maintenance organizations
("HMOs") in California, Indiana and Louisiana and have a combined enrollment of
approximately 446,000 as of June 30, 2000. In June 2000, we entered into a
definitive agreement for the sale of the Louisiana HMO, which has approximately
13,000 members as of June 30, 2000. The completion of this transaction is
expected to occur during the third quarter of 2000 and is subject to regulatory
and other customary approvals and conditions. We also operate Maxicare Life and
Health Insurance Company and HealthAmerica Corporation. Through these
subsidiaries, we offer an array of employee benefit packages, including group
HMO, Medicaid and Medicare HMO, preferred provider organization, point of
service, group life and accidental death and dismemberment insurance,
administrative services only programs, wellness programs and other services and
products.

SUMMARY CONSOLIDATED FINANCIAL DATA

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25

AT MARCH 31, AT DECEMBER 31,
------------------- ------------------------------
2000 1999 1999 1998 1997
-------- -------- -------- -------- --------
(AMOUNTS IN THOUSANDS EXCEPT FOR MEMBERSHIP DATA)

MEMBERSHIP DATA:
Number of members..................... 451,800 482,800 466,600 512,000 514,000

NOTES TO SUMMARY CONSOLIDATED FINANCIAL DATA

(2) Includes long-term liabilities of $2.8 million and $3.1 million at March 31,
2000 and March 31, 1999, respectively. Includes long-term liabilities of
$3.0 million, $.6 million and $.2 million, at December 31, 1999, 1998 and
1997, respectively.
4
26

RISK FACTORS

FUTURE COSTS OF HEALTH CARE SERVICES THAT WE PROVIDE TO OUR MEMBERS MAY RISE
FASTER THAN THE RELATED PREMIUMS WE RECEIVE.

HIGHER THAN ESTIMATED HEALTH CARE COSTS MAY ADVERSELY AFFECT OUR BUSINESS.

PHARMACEUTICAL COSTS CONTINUE TO RISE AT A RATE IN EXCESS OF OUR ABILITY TO BE
REIMBURSED.

THE RISK OF ADVERSE VARIATIONS IN OUR CLAIMS RESERVES HAS INCREASED.

5
27

members as a result of a trend away from capitated arrangements with our medical
providers; accordingly, the risks we face with respect to material variations in
our claims reserves have increased.

OUR INABILITY TO OBTAIN COST EFFECTIVE CONTRACTS WITH PROVIDERS MAY RESULT IN
HIGHER HEALTH CARE COSTS AND LOSS OF MEMBERSHIP.

Our marketability and profitability depends, in large part, on our ability
to attract and contract on a cost effective basis with hospitals, medical
groups, physicians and other provider contracting entities. In selected markets,
certain providers, particularly hospitals, physicians/hospital organizations or
multi-specialty physician groups may have significant market positions and/or
compete directly with us. In the past certain providers have refused to contract
with us or utilized their market position to place us at a competitive
disadvantage. To the extent this continues to occur our ability to market our
managed care products and control our costs could be adversely affected
resulting in higher health care costs and loss of membership.

THE FINANCIAL INSTABILITY OF OUR PROVIDERS MAY EXPOSE US TO LIABILITY FOR UNPAID
CLAIMS, LOSS OF MEMBERSHIP AND INCREASED HEALTH CARE COSTS.

IT IS DIFFICULT FOR US TO COMPETE IN THE HMO BUSINESS BECAUSE OUR MARKET SHARE
IS RELATIVELY LOW.

OUR GEOGRAPHIC AND LINES OF BUSINESS CONCENTRATIONS SUBJECT US TO INCREASED
BUSINESS RISK.

Our Medicaid and Medicare lines of business are subject to our ongoing
ability to secure contracts with governmental entities who contract with us.
Governmental programs are also subject to extensive federal and state
regulation. Our Medicaid and Medicare premium revenues represented approximately
25% and 16%, respectively, of our total premium revenues for the quarter ended
March 31, 2000. Our failure to retain one or more of our governmental contracts
could have a material adverse effect on our business and operations.

Our 10 largest commercial employer groups accounted for approximately 34%
of our commercial membership as of June 30, 2000. Our largest commercial
employer group, the state of Indiana,

6
28

WE MAY BE ADVERSELY AFFECTED BY COMPLICATIONS IN THE ENHANCEMENT OF OUR
MANAGEMENT INFORMATION SYSTEMS.

Our business operations are significantly dependent on the functionality
and effectiveness of our management information systems. In addition, our
current management information systems are based on a highly capitated business
model which we are in the process of shifting towards a shared risk model. We
are presently assessing installation of significant system enhancements and/or
conversions including internet-based systems. Any significant service
disruptions resulting from the implementation of these initiatives and/or
conversions could result in a material adverse impact on our business processes,
customer and provider relationships, results of operations and financial
condition. Further, any complications in adjusting our management information
systems to deal with our increasingly non-capitated business model may place
additional burdens on us.

WE ARE SUBJECT TO EXTENSIVE FEDERAL AND STATE LAWS AND REGULATION AND PENDING
LEGISLATION.

The health care industry is subject to extensive laws and regulations,
including, but not limited to, requirements related to licensing, policy
benefits design, member disclosure and enrollment, cash reserves, net worth and
restrictions on dividending. In addition, we are subject to various reviews and
audits regarding compliance with applicable laws and regulations. These laws and
regulations are subject to frequent changes and future changes related to
pending legislation or regulation could force us to change the way we do
business resulting in a material adverse impact on our operations. Since
approximately 41% of our premium revenues for the three months ended March 31,
2000 were derived from governmental contracts, we are especially vulnerable to
changes in laws or regulations concerning these programs.

IN THE FUTURE, THE STATES IN WHICH WE DO BUSINESS MAY ADOPT MORE STRINGENT
MINIMUM CAPITALIZATION REQUIREMENTS.

COSTS ASSOCIATED WITH LITIGATION AND OTHER ACTIONS MAY RESULT IN LOSSES.

The HMO industry has been subject to a number of separate class action
lawsuits against certain select national HMOs which may cause or force changes
in business practices of the HMO industry.

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29

WE HAVE EXPERIENCED RECENT OPERATING LOSSES AND OUR RETURN TO PROFITABILITY IS
DEPENDENT UPON THE SUCCESSFUL IMPLEMENTATION OF OPERATING INITIATIVES AND OTHER
FACTORS.

We incurred losses during our fiscal years ended December 31, 1997, 1998
and 1999 of $25.1 million, $27.5 million and $12.3 million, respectively and
anticipate incurring additional losses this fiscal year. We are undertaking a
variety of operating initiatives designed to improve our market position,
strengthen our medical management, enhance our administration and control over
claims processing and payment, and improve other critical business processes. We
have recently added senior management talent to our organization to direct these
operating initiatives and have added staff resources to complement these
initiatives. We are also pursuing the implementation of significant information
systems enhancements and/or conversions including internet-based systems. There
is no guarantee; however, that we will be able to successful implement these
initiatives or if implemented they will result in our return to profitability.

OUR RIGHTS OFFERING MAY JEOPARDIZE OUR UTILIZATION OF SIGNIFICANT TAX BENEFITS.

As of March 31, 2000, we had approximately $407.5 million of federal net
operating tax losses that we can use to offset future federal taxable income and
which expire in the years 2003 through 2019. However, our issuance of common
stock in our rights offering may prevent us from fully utilizing these benefits
because it increases the likelihood of a statutory "ownership change" as defined
by the Internal Revenue Code of 1986, as amended. If an ownership change occurs,
the tax code limits the amount of tax benefits that we can use in a year to an
amount based on the fair market value of our stock multiplied by a long-term tax
exempt rate. This amount is significantly less than $407.5 million. This
limitation may cause some of our tax benefits to expire unutilized. Therefore,
if we were successful in generating future taxable income, we may have to pay
more income taxes or pay such taxes sooner than if our tax benefits were not
limited.

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30

USE OF PROCEEDS

We will not receive any of the proceeds from the sale of shares by the
selling shareholder.

SELLING SHAREHOLDER

This prospectus relates to the possible offer and sale, from time to time,
of shares held by the selling shareholder named below. These shares of common
stock were issued to the selling shareholder in an unregistered private
placement completed June, 2000. The following table sets forth the name of the
selling shareholder, along with the number of shares of common stock held by it
as of the date of this prospectus and the number of shares offered for sale in
this prospectus. The number of shares offered for sale by the selling
shareholder may be updated in supplements to this prospectus, which will be
filed with the SEC in accordance with Rule 424(b) under the Securities Act of
1933, as amended, as may be necessary.

There exists no material relationship between the selling shareholder and
us or any of our predecessors or affiliates, nor have any material relationships
existed within the past three years.

NUMBER OF SHARES NUMBER OF SHARES
OF COMMON STOCK OF COMMON STOCK NUMBER OF SHARES NUMBER OF SHARES
SELLING BENEFICIALLY COVERED BY THIS OF COMMON STOCK OF COMMON STOCK
SHAREHOLDER OWNED PROSPECTUS AFTER OFFERING (MAXIMUM SOLD)
----------- ---------------- ---------------- ---------------- ----------------

Meespierson Cayman
Limited, as trustee of
Sofaer Funds/SCI Global
Hedge Fund............. 800,000 800,000 800,000 -0-

PLAN OF DISTRIBUTION

The selling shareholder may sell the shares covered by this prospectus from
time to time in transactions (including one or more brokerage transactions) or
in one or more privately negotiated transactions. The price of each sale may be
made at the market price prevailing at the time of the sale, a price related to
such prevailing market price, a negotiated price or a fixed price. We will not
receive any of the proceeds from the sale of these shares.

These shares may be offered and sold from time to time in any manner
permitted by law. The shares may be sold directly to one or more purchasers. The
shares may also be sold to or through underwriters, brokers, dealers or agents.
These underwriters, brokers, dealers or agents may receive compensation in the
form of discounts, concessions or commissions from the selling shareholder or
the purchasers of shares for whom they may act as agent or to whom they may sell
as principal, or both.

In order to comply with certain state securities laws, if applicable, these
shares will be sold only through registered or licensed brokers or dealers.

Under applicable rules and regulations under the Securities and Exchange
Act of 1934, as amended, any person engaged in a distribution of these shares
may not simultaneously engage in certain activities with respect to these shares
prior to the commencement of such distribution. In addition to, and without
limiting the foregoing, the selling shareholder and any other person
participating in a distribution will be subject to the applicable provisions of
the Exchange Act.

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31

EXPERTS AND COUNSEL

No expert or counsel had or is to receive a substantial direct or indirect
interest in us or any of our subsidiaries in connection with the offering. No
expert or counsel was connected to us or our subsidiaries as a promoter,
underwriter, voting trustee, director, officer or employee.

WHERE YOU CAN FIND MORE INFORMATION

405 Fifth Street, N.W., Room 1024 Washington, D.C. 20549-1004;

CitiCorp Center 500 W. Madison Street, Suite 1400, Chicago, Illinois
60661; and

Seven World Trade Center 13th Floor New York, New York 10048

Please call the SEC at 1-800-732-0330 for more information about the public
reference rooms and requesting documents.

The SEC allows us to "incorporate by reference" in this prospectus the
information we file with them, which means we can refer you to important
information without restating it in this prospectus. The information
incorporated by reference is an important part of this prospectus, and
information that we file later with the SEC will automatically update and
supersede this information. We incorporate by reference the documents listed
below and any future filings, prior to the termination of this offering, made
with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act:

Our Quarterly Report on Form 10-Q for the quarter ended March 31,
2000;

Our Annual Report on Form 10-K for the year ended December 31, 1999;
and

"Description of Registrant's Securities to be Registered" contained in
Item 11 of our registration statement on Form 10 filed on January 17, 1991.

You may request a copy of any or all of the information incorporated in
this prospectus by reference, at no cost, by writing or telephoning us at the
following address:

Maxicare Health Plans, Inc.
1149 South Broadway Street
Los Angeles, CA 90015
(213) 765-2000

You may also direct your requests via e-mail to jwhite@Maxicare.com.

10
32

where the offer or sale is not permitted. The information contained in this
prospectus is correct only as of the date of this prospectus, regardless of the
time of the delivery of this prospectus or any sale of these securities.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Our certificate of incorporation and bylaws provide for indemnification of
our officers and directors, among other things, in instances in which they acted
in good faith and in a manner they reasonably believed to be in, and not
opposed, to our best interests and in which, with respect to criminal
proceedings, they had no reasonable cause to believe their conduct was unlawful.
There is no limit regarding their liability for breaches of the duty of loyalty,
acts or omissions not in good faith or involving intentional misconduct or
knowing violation of the law, the unlawful purchase or redemption of stock or
payment of unlawful dividends or the receipt of improper personal benefits. We
may also indemnify employees and others at the discretion of our board. This
indemnification must be authorized by our board. The indemnification provisions
of the Delaware General Corporation Law make mandatory the indemnification of a
director or officer to the extent that the director or officer has been
"successful on the merits or otherwise," thus possibly requiring indemnification
of settlements in certain instances. The Delaware law also provides that a
director or officer may be indemnified by us for expenses of a derivative suit
even if this director or officer is not successful on the merits, provided this
director or officer acted in good faith and in a manner reasonably believed to
be in or not opposed to our best interests, subject, in the case of an adverse
judgment, to court approval. Article Eighth of our certificate of incorporation
requires that we provide indemnification for our directors and officers to the
fullest extent allowable under Delaware law. This may include indemnification
against liabilities under the Securities Act, and may limit the liability of
directors and officers to us or our shareholders, unless the director or officer
fails to meet the prescribed standard of conduct. We have insurance covering
expenditures that might arise in connection with our lawful indemnification of
our directors and officers for certain liabilities and expenses. Our directors
and officers also have the benefit of insurance against certain other
liabilities and expenses. We have also entered into employment and
indemnification agreements with certain of our officers which provide for
indemnification to the fullest extent permitted by law against any liabilities
and expenses.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the registrant
pursuant to the foregoing provisions, we have been informed that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.

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

TABLE OF CONTENTS

PAGE
----

Prospectus Summary.................. 2
Risk Factors........................ 5
Use of Proceeds..................... 9
Selling Shareholder................. 9
Plan of Distribution................ 9
Experts and Counsel................. 10
Where You Can Find More
Information....................... 10
Indemnification of Directors and
Officers.......................... 11

MAXICARE
HEALTH PLANS, INC.

800,000 SHARES OF
COMMON STOCK
------------------------

PROSPECTUS
------------------------
, 2000

- ------------------------------------------------------
- ------------------------------------------------------
34

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table indicates the expenses to be incurred in connection
with the offering described in this Registration Statement, all of which will be
paid by us. All amounts are estimates, other than the Securities and Exchange
Commission registration fee, the National Association of Securities Dealers,
Inc. fee and the Nasdaq listing fee.

Securities and Exchange Commission registration fee......... $ 8,255
National Association of Securities Dealers, Inc. fee........ 3,409
Nasdaq listing fee.......................................... 17,500
Standby underwriter's accountable expenses.................. 100,000
Standby underwriter fee..................................... 1,000,000
Accounting fees and expenses................................ 50,000
Legal fees and expenses..................................... 150,000
Printing and engraving expenses............................. 50,000
Transfer agent and registrar fees and expenses.............. 25,000
Blue Sky fees and expenses (including counsel fees)......... 25,000
Miscellaneous expenses...................................... 70,836
----------
Total............................................. $1,500,000
==========

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Under Article Eighth of the Registrant's Restated Certificate of
Incorporation, each person who is a director or officer of the Registrant shall
be indemnified by the Registrant to the fullest extent permitted by section 145
of the Delaware General Corporation Law ("DGCL").

Section 145(a) of the DGCL permits a corporation to indemnify any director,
officer, employee or agent of the corporation against expenses, judgments, fines
and amounts paid in settlement or incurred by him or her in connection with any
proceeding arising out of his or her status as director, officer, employee or
agent if such person acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action, had no reasonable cause to believe his or
her conduct was unlawful. To the extent that such a person has been successful
in defense of any such action or claim, section 145(c) provides that he or she
shall be indemnified against expenses incurred by him or her in connection
therewith.

Under section 145(e), a corporation also has the power to purchase and
maintain insurance on behalf of any director, officer, employee or agent against
any liability arising out of his or her status as such, whether or not the
corporation would have the power to indemnify him or her against such liability.

The Registrant maintains an officers and directors' liability policy
insuring its officers and directors against certain liabilities and expenses
incurred by them in their capacities as such, and insuring the Registrant under
certain circumstances to the extent that indemnification payments are made by
the Registrant to such officers and directors.

The Registrant has entered into employment and indemnification agreements
(the "Indemnification Agreements") with certain of its officers (individually,
an "Indemnitee"). The Indemnification Agreements provide, among other things,
for indemnification to the fullest extent permitted by law against any and all
costs, claims, judgments, fines, settlements, liabilities, and fees or expenses

II-1
35

(including attorney fees) incurred in connection with any proceedings arising
out of the Indemnitee's actions or in the actions in his capacity as an officer
of the Registrant. In the event the Indemnitee is no longer employed by the
Registrant at the time his attendance is required at a proceeding pursuant to
which he is entitled to be indemnified, then the Indemnitee shall be entitled to
be paid a stipend in the amount of $1,000 per day to reimburse the Indemnitee
for all reasonable travel, hotel and living expenses incurred by him in
connection with such attendance. The Indemnification Agreements provide for the
prompt advancement of all expenses to the Indemnitee and for reimbursement to
Registrant if it is found that such Indemnitee is not entitled to such
indemnification under applicable law.

ITEM 16. EXHIBITS.

(a) EXHIBITS

EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

1.1 Form of Standby Underwriting Agreement
1.2 Form of Underwriter's Warrant
4.1 Certificate of Incorporation, as amended and restated, which
includes, Restated Certificate of Incorporation of
Healthcare USA Inc. filed with the Office of the Secretary
of State of Delaware on July 19, 1985, Certificate of Merger
of MHP Acquisition Corp into Healthcare USA Inc. filed with
the Office of the Secretary of State of Delaware on
September 13, 1986, Certificate of Change of Registered
Agent and Registered Office filed with the Office of
Secretary of State of Delaware on August 17, 1987
Certificate of Merger Merging Maxicare Health Plans, Inc.
with and into Healthcare USA Inc. (including as Exhibit A
thereto the Restated Certificate of Incorporation of
Healthcare USA Inc. filed with the Office of the Secretary
of State of Delaware on May 17, 1991, Certificate of
Ownership and Merger Merging HealthAmerica Corporation into
Maxicare Health Plans, Inc. filed with the Office of the
Secretary of State of Delaware on November 22 1991,
Certificate of Amendment of Restated Certificate of
Incorporation of Maxicare Health Plans, Inc. filed with the
Office of the Secretary of State of Delaware on March 9,
1992, Certificate of Ownership and Merger Merging HCS
Computer, Inc. into Maxicare Health Plans, Inc. filed with
the Office of the Secretary of State of Delaware on November
6, 1992, and Certificate of Designation of Series B
Preferred Stock of Maxicare Health Plans, Inc. filed with
the Office of the Secretary of State of Delaware on February
27, 1998, Certificate of Amendment of Certificate of
Incorporation of Maxicare Health Plans, Inc. filed with the
Office of the Secretary of State of Delaware on July 30,
1998. Incorporated by reference from the Company's Quarterly
Report on Form 10-Q for the quarterly period ended September
30, 1998 in which this exhibit bore exhibit number 3.5
4.2A Rights Agreement, dated as of February 24, 1998, between
Maxicare Health Plans, Inc. and American Stock Transfer &
Trust Company as Rights Agent, which includes, as Exhibit A
thereto, the Certificate of Designation of Series B
Preferred Stock of Maxicare Health Plans, Inc., as Exhibit B
thereto, the Form of Right Certificate, Form of Assignment,
and Form of Election to Purchase, and as Exhibit C thereto,
the Summary of Rights Agreement. Incorporated by reference
from the Company's Report on Form 8-K dated May 4, 1999 in
which this exhibit bore exhibit number 4.13.

II-2
36

EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

4.2B First Amendment to Rights Agreement of Maxicare Health
Plans, Inc., entered into and between Maxicare Health Plans,
Inc. and American Stock Transfer & Trust Company as of
October 9, 1999. Incorporated by reference from the
Company's Quarterly Report on Form 10-Q for the three months
ended September 30, 1998 in which this exhibit bore exhibit
number 4.13a.
4.2C Second Amendment to Rights Agreement of Maxicare Health
Plans, Inc., entered into and between Maxicare Health Plans,
Inc. and American Stock Transfer & Trust Company as of June
6, 2000.
4.3 Form of Rights Subscription Certificate
5.1 Opinion of Jeffer, Mangels, Butler & Marmaro LLP*
13.1 Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2000
13.2 Registrant's Annual Report on Form 10-K for the year ended
December 31, 1999
23.1 Consent of Ernst & Young LLP Independent Auditors
23.2 Consent of Jeffer, Mangels, Butler & Marmaro LLP (included
in Exhibit 5.1)*
24.1 Power of Attorney (included in Part II -- Signatures of this
Registration Statement)

- -------------------------
* To be filed by amendment

ITEM 17. UNDERTAKINGS.

(a) The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement). Notwithstanding the forgoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in "Calculation of
Registration Fee" table in the effective registration statement;

(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to

II-3
37

section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(c) The undersigned registrant hereby undertakes to supplement the
prospectus, after the expiration of the rights subscription period, to set forth
the results of the rights offering, the transactions by the Standby Underwriter
during the rights subscription period, the amount of unsubscribed securities to
be purchased by the Standby Underwriter, and the terms of any subsequent
reoffering thereof. If any public offering by the Standby Underwriter is to be
made on terms differing from those set forth on the cover page of the
prospectus, a post-effective amendment will be filed to set forth the terms of
such offering.

(d) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

(e) The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-4
38

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-2 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Los Angeles, State of California, on this
day of , 2000.

MAXICARE HEALTH PLANS, INC.

By: /s/ RICHARD A. LINK
------------------------------------
Richard A. Link
Chief Operating Officer and
Chief Financial Officer
(Principal Financial Officer)

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

Each person whose signature appears below appoints Richard A. Link and Paul
R. Dupee, Jr., and each of them, with full power of substitution and
resubstitution, his true and lawful attorneys-in-fact, for him in any and all
capacities, to sign any amendments (including post-effective amendments) to this
Registration Statement and to file the same, with exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission.

SIGNATURE TITLE DATE
--------- ----- ----

Chief Executive Officer and , 2000
- -------------------------------------------------------- Chairman of the Board of
Paul R. Dupee, Jr. Directors (Principal
Executive Officer and
Director)

Chief Operating Officer and , 2000
- -------------------------------------------------------- Chief Financial Officer
Richard A. Link (Principal Financial Officer
and Principal Accounting
Officer)

Director , 2000
- --------------------------------------------------------
George H. Bigelow

Director , 2000
- --------------------------------------------------------
Claude S. Brinegar

Director , 2000
- --------------------------------------------------------
Robert M. Davies

Director , 2000
- --------------------------------------------------------
Charles E. Lewis

II-5
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SIGNATURE TITLE DATE
--------- ----- ----

Director , 2000
- --------------------------------------------------------
Thomas W. Field, Jr.

Director , 2000
- --------------------------------------------------------
Elwood I. Kleaver

Director , 2000
- --------------------------------------------------------
Simon J. Whitmey

II-6