Ways to find the billions needed for the National Health Insurance (NHI) scheme could include an increase in the VAT rate, a payroll tax on employers, and a surcharge on the taxable income of individuals, Finance Minister Pravin Gordhan said on Wednesday.

The new system would require funding over and above current budget allocations to public health, he told MPs, tabling his 2012/13 Budget in the National Assembly.

"Funding options include an increase in the VAT rate, a payroll tax on employers, a surcharge on the taxable income of individuals, or some combination of the above."

It was expected that an extra R6 billion would be needed for the NHI in 2014/15.

An additional R1bn conditional grant had been allocated over the next three years to cover the cost of NHI pilot projects, which would be established in "selected districts" during this year and 2013.

The grant would serve as an interim funding mechanism. It was likely to last about five years, until a permanent funding stream for the new system -- which is to be phased in over 14 years -- was established.

"Achieving an appropriate balance in the funding of national health insurance is necessary to ensure that the tax structure remains supportive of economic growth, job creation and savings," Gordhan said.

The new system would provide "equitable health coverage for all South Africans".

According to the Budget Review document, tabled by Gordhan on Wednesday, the aim of the pilot sites was to start laying a foundation for the scheme, including skilled managers and a re-engineering of primary health care.

"Integrated teams of specialists -- obstetricians, gynaecologists, family physicians, anaesthetists, midwives and nurses -- will provide clinical services at this level.

"In particular, pregnant women and women who have recently given birth, as well as children, are expected to benefit from the greater involvement of specialists at primary level."

At a joint media briefing with Gordhan, Health Minister Aaron Motsoaledi said steps to improve public health care facilities were vital if NHI were to be implemented successfully.

"We are acutely aware that the implementation of NHI must be preceded by a massive preparation phase.

"The public health service must be overhauled if NHI is to make any sense."

He said NHI pilot projects in 10 districts, yet to be announced, would focus on upgrading public health facilities and regulating health care prices.

"It will be prioritised in these districts without any prevarication."

The Budget Review said five hospitals would be prioritised in the first phase of a public-private partnership programme for improving health facilities.

These were Chris Hani Baragwanath, George Mukhari Hospital, Limpopo Academic Hospital, King Edward VIII Hospital and Nelson Mandela Academic Hospital.

Implementation would begin once feasibility studies had been completed and plans approved.

As national health insurance progressed, the public sector would need to recruit more doctors and nurses, and expand contracting with selected general practitioners, according to the Budget Review.

Motsoaledi announced that the department would hire senior staff to improve management at public hospitals without delay.

"This weekend we will be announcing 92 positions for CEOs that include all the 10 central hospitals, because we need to start putting managers who are competent, who are at a very senior level in the public service."

He said he planned to deploy "some of the best management you can ever get" in the districts where NHI would be piloted.