U.S. health insurers face mounting cost pressure driven by drug shortages, rising costs for pharmaceuticals and other inputs, and higher usage. However, a leading credit rating agency said they have the ability to respond.

"Insurers will be compelled to incorporate these rising pressures into their cost projections when establishing premium pricing in the coming years, although rates of increase will vary significantly by region due to local market conditions," according to Fitch Ratings. "As consumers begin to face higher premium rate increases, the public discourse around affordability of health care coverage, although ever present, will likely be reinvigorated in the near term."

Higher general inflation in medical supplies and pharmaceuticals, combined with staffing issues, have increased costs for providers. Additionally, pockets of recent higher utilization from pent-up demand for elective procedures and other medical care deferred during the pandemic, although a positive development for hospitals, surgery-center operators and medical device companies, are driving increased cost pressures for insurers. These issues will promote higher premium pricing and out-of-pocket costs for consumers and higher costs for government-funded business.