If you are due for a heart bypass next week, you will have more than a passing interest in whether or not your hospital is trying to do things on the cheap. The Department of Health worries a good deal about protecting quality, and yet its approach to pile-'em-high, sell-'em-cheap operations is not quite clear. Even though the controversial legislation to overhaul the health service is already published and before parliament, Whitehall has been giving mixed messages about how far the burgeoning medical market will be driven by price, as opposed to quality alone.

When the bill was published, the department proclaimed that the regulator, Monitor, would "oversee the process of price competition". That fitted with the white paper, which had said that regulation tariffs ought to be maximums, implying that the cut and thrust of rival bids could sometimes drive down costs. Last week, however, the NHS chief executive, Sir David Nicholson, wrote to colleagues insisting there was "no question of introducing price competition". This seeming inconsistency is explained away with a Jesuitical distinction between red-raw competition and the gently expressed possibility that healthcare providers and purchasers may agree between themselves to curb costs. The difference sounds slippery, so it is as well for the health secretary, Andrew Lansley, that he has another argument up his sleeve – namely that the new freedom to broker costs cannot be so scary since it was anticipated by Labour in an official document in 2009.

That much is true, and it is deeply embarrassing for Labour now that Ed Miliband is focusing his attack on the Lansley reforms on the dangers of price competition. There was no consistent direction on public services during the Brown years, and perhaps a market-minded official slipped in the proposal allowing contractors to bid below the NHS tariff to try to restore the lost Blairite thrust towards competition and choice. But back in the world where Andy Burnham was making public hospitals the "preferred provider", this sort of regulatory tweak was never going to have much effect. The culture of an NHS infirmary which is used to working to flat-rate contracts is not one in which the thought of launching a price war occurs. But the whole ecology of healthcare is now being transformed, with the introduction of a new-look regulator explicitly charged with promoting competition. And to the global businesses lured into the new healthcare market it will be second nature to compete on price as well as quality, whether or not that is what Mr Lansley intends.

The health secretary points to the regulator's duty to improve quality, which is indeed in the bill. But quality has so many dimensions, many of them hard to gauge, that it is hard to guarantee by statutory diktat, as Labour found to its cost. The respected healthcare economist Carol Propper says it is precisely because price is transparent while quality is opaque that price competition has not worked well in either the US or the UK, where it was briefly applied round the edges of the internal market during the mid-1990s. By contrast, she says, competing on quality can work well with fixed prices.

Cut-cost deals, it is true, will need central approval, but the demands of cash-strapped GP consortiums that are refusing patients treatments they cannot afford could be hard to resist. It is also true that individual choice will help the well-informed avoid cheap facilities, but not those many patients who will continue to be guided by their doctors. It may be that Mr Lansley judges that he needs to give his new market the potential power to reduce prices to be sure of meeting rising cost pressures, even if he hopes that this flexibility need only rarely be used. Without new safeguards, however, MPs scrutinising his bill will be obliged to ask themselves: how many of their constituents would be happy to go under the cut-price knife?