The financial chief for the Public Employees Benefits Program said Thursday the plan lost $16.6 million in fiscal 2001-02.
Leslie Johnstone told the benefits program board, however, "that's $2 million better than originally projected."
She said the loss was expected as claims have been out pacing premium and interest revenues for most of the past year.
The governor recommended and the Nevada Legislature approved a slight decrease in premiums paid by the state for state workers during the 2003 session despite warnings that health-care costs were continuing to increase.
Johnstone told the benefits committee premium revenues increased just 6 percent during the last fiscal year while claims costs increased 34 percent.
To compound the problem, she told the board interest income decreased 55 percent during the year because of the economy and falling interest rates.
She said the claims continue to climb and that the state as of October was averaging a record $648,000 a day.
But she predicted the benefits program's finances would begin to stabilize by the end of October when new, higher premiums start coming in from state agencies. Those premium increases were approved by the legislative special session Aug. 1 to prevent the plan from going in the red.