The initial phase of National Health Insurance (NHI) will not drain money from the fiscus, but finance minister Pravin Gordhan warns that over the long term, a tax increase to fund the project might be needed.
Gordhan deferred the issue of funding to a discussion paper which is expected to be released this year.
National treasury is still in discussions with the department of health to study funding models, though pilot projects have been rolled out in 10 districts.
A white paper, expected in the first quarter of this year, will flesh out proposals contained in the green paper released in 2011.
It remains unknown how much the programme will cost, making it difficult for Gordhan to pronounce on funding, says Ashleigh Theophanides, a health-care actuary at Deloitte.
However, Gordhan made bold statements about health infrastructure and the revitalisation of hospitals and clinics, which has progressed slowly.
Over the medium term, R19bn will be spent on health infrastructure. The minister has merged the three grants relating to infrastructure development, including the revamping of nursing colleges.
The national department of health will assume a greater role in co-ordinating these projects, also undertaking certain infrastructure projects for provinces through a new conditional grant.
This is a victory for health minister Aaron Motsoaledi, who has been eager to take control where provincial departments have lagged. Provinces will still get the lion's share of funding - 93,5% of the allocation - as the bulk of the work will be done at that level.
Infrastructure upgrade is one of government's priorities and a central pillar in the roll out of NHI.
But provincial departments have been sluggish in some key capital projects, causing backlogs. Gauteng spent only 34% of its budgeted expenditure on hospital revitalisation in the past financial year, despite a large number of clinics and hospitals needing re-novation.
As of the end of last year, Gordhan reported that over 1900 health facilities and 49 nursing colleges were in different stages of planning, construction and refurbishment. In his 2011 state of the nation address, President Jacob Zuma said 105 nursing colleges were to be re-opened. Theophanides says greater involvement by the national department of health in the roll-out of infrastructure should help fast-track progress.
The reopening of nursing colleges is urgent as they are expected to ease the burden of universities, which are battling to scale up on doctors. No deadline for when the 49 colleges will start teaching has been set. But a note in the budget statements shows progress has been slow, as just 35% of the budget for nursing colleges was utilised during the 2012/2013 fiscus.
This threatens the department's ambitious human resources strategy, which includes training 51200 nurses over the next 10 years.
However, Sven Byl, KPMG head of Africa health-care practice, is encouraged by the focus on primary health care.
"We need to build a health-care system that's based on clinics," he says. "Hospitals are underperforming because they're overburdened - people don't have confidence in their local clinics."
Spending on HIV/Aids continues to grow as government enrols more people on antiretroviral treatment. But it has started feeling the pinch following the withdrawal of donor funds. In this fiscus, government had to allocate an additional R484m to offset a 50% reduction in US donor support for Aids programmes.