The United States should slow down runaway health spending and worry about Social Security later.

This was the message Tuesday, as officials used the release of the annual report card on Social Security and Medicare as an opportunity to promote President Barack Obama’s call for a major overhaul of the nation’s health care system.

Treasury Secretary Timothy Geithner said the administration doesn’t plan to start building a bipartisan consensus on fixing Social Security’s finances until after it has won passage of legislation aimed at expanding health care coverage while restraining costs.

“We want to move on health care,” Geithner said at a news conference where he and the other trustees of the Medicare and Social Security systems disclosed the latest assessment of the giant entitlement programs’ financial status. Medicare’s outlook is daunting, they said, while Social Security’s long-range deficit is more manageable.

Health care spending has been growing faster than the rest of the economy for years, and that has a big effect on Medicare spending. Last year, the federal health care and disability program consumed 3.2 percent of the nation’s gross domestic product, or its total output of goods and services. But the trustees said that share would grow rapidly, surpassing Social Security spending in the year 2028. It will reach 11.4 percent of GDP by the year 2083, the last year of the forecast period.

In the short run, the Medicare hospital trust fund, financed through payroll taxes (both workers and their employers pay 1.45 percent of wages) is projected to run out of money in 2017, two years sooner than last year’s report forecast.

Social Security’s problems pale by comparison. Its spending now consumes about 4.4 percent of GDP, and will peak at 6.2 percent in 2034, and then decline to 5.8 percent after 2050, as the boomer generation passes from the scene, according to the trustees’ report. The trustees projected that Social Security’s full financial crisis won’t hit until 2037, when the Treasury bonds that make up its trust fund will be exhausted. At that point, enough payroll tax revenue will be coming in to pay for just 76 percent of the benefits promised under current law.

Real cost of Medicare a mystery

Experts can calculate Social Security’s future finances with relative precision. But the future cost of Medicare is an unknown, because health care innovations and their costs are unpredictable. What if someone discovers a medication to prevent Alzheimer’s disease, but it costs $50,000 a year per person? Americans would certainly expect Medicare to help them deal with this. The Alzheimer’s Association estimates that the U.S. caseload could reach 15 million by the year 2050.

Medicare “is a much bigger issue” than Social Security, said Jeffrey R. Brown, professor of finance at the University of Illinois at Urbana-Champaign and a former member of the Social Security Advisory Board, an independent group of experts helping the Social Security Administration. For Social Security, the “economic downturn makes things look worse in the short run,” he said. But “we know how to fix Social Security—it is simply dollars in and dollars out.”

Since becoming president, Obama has made virtually no mention of his campaign call for higher Social Security taxes on people making more than $250,000 a year as one step to deal with the program’s long-range fiscal deficit. And his administration has brushed aside suggestions for a special commission to deal with the finances of Social Security and Medicare.

“The administration has made it pretty clear they are not interested in a commission,” said John Rother, AARP’s policy director. “They want to turn to Social Security after health reform is enacted.”

A key Republican agrees that health care reform comes first. “The message of the trustees’ report is loud and clear,” said Charles Grassley of Iowa, the ranking Republican on the Senate Finance Committee, which is handling health care reform legislation. “We need to act now to address Medicare’s fiscal sustainability. Kicking the can down the road isn’t an option any more, because we’re at the end of the road.”

Social Security is fixable

When the Obama administration does get around to addressing Social Security, the numbers in the trustees report demonstrate that a solution is feasible. It is the politics that are so daunting, because the fix calls for some mixture of revenue increases and benefit cuts, two approaches unpopular even in the best of times.

Here’s how the trustees said Social Security could be fixed today: It can be made solvent for 75 years with an immediate tax increase of two percentage points or an immediate benefit cut of 13 percent.

Currently, the Social Security tax rate is 6.2 percent for the worker and 6.2 percent for the employer, for a total of 12.4 percent of salary. So, on the average wage of $40,045 that Social Security uses to calculate benefits, both worker and employer would pay an additional $2,482.79 in taxes. If you raise the rate two percentage points to 14.4 percent, both would pay $2,883.24—more than an additional $400 each.

If you solve the problem solely by trimming benefits by 13 percent, the average Social Security benefit of $1,155 a month would fall by $150.15 a month.

Sometime between now and 2037, a president and Congress will figure out some combination of tax hikes and benefit reductions to ensure the future solvency of Social Security. It’s a safe bet that they will avoid the extremes of placing it all on the revenue side or all on the side of reduced benefits. Raising the age requirement for benefits is among the additional options.

No Social Security COLA until 2012

Meanwhile, the 51 million people receiving Social Security benefits face some sobering news now. There will be no cost-of-living increase for 2010 and 2011, the first time an inflation adjustment has been skipped since the annual COLA increases started in 1975. The 2012 increase is projected to be 1.4 percent, the trustees said in their report.

The inflation measure is pegged to the cost of living of workers, and may fail to measure the full impact on people living on retirement checks, because they spend more on health care, according to Rother of the AARP. “No Social Security increase, combined with a big increase in Medicare Part D payments for drugs, could put real pressure on the budgets of seniors,” he said.

Because they won’t get a raise in their Social Security benefits, about 75 percent of Medicare beneficiaries will be sheltered from an increase in their Part B premiums for medical services like doctors’ services and outpatient care. Those will stay at the current level of $96.40 for the next two years, the trustees said.

The other 25 percent of beneficiaries will pay $104.20 a month for Part B in 2010 and $120.20 a month in 2011, according to an administration official who briefed reporters on Tuesday. Those beneficiaries include individuals with incomes over $85,000 a year and married couples over $170,000; poor people whose premiums are paid by the government; and people who turn 65 and join Medicare for the first time.

Bob Rosenblatt is a former Washington correspondent for the Los Angeles Times.