One of the most toxic charges levelled against the coalition is that it is hellbent on privatising the health service. Once the government got through its radical changes to the NHS, it must have hoped the accusation would be shown to be baseless. Not a chance. In the Lords, on Wednesday, peers will consider whether the most far-reaching plans to open up the NHS to the private sector were, in effect, buried in secondary regulations – and whether these need to be quashed. This is the coalition's second attempt to pass the rules – the initial proposal was withdrawn under protest from Labour and campaigners.

Norman Lamb, the Liberal Democrat health minister, redrafted the regulations – and came up with a formulation that allows the NHS and GPs not to have to put a service out to tender if it is "capable of being provided only by [one] provider". Earl Howe, Lamb's Tory colleague in the upper house, says the "procurement law is no different" from Labour's. Whatever the claims, the government's changes have met with a barrage of criticism. Notably, charities accuse the coalition of, yes, you guessed it, privatising the health service.

Beyond Westminster, there appear to be troubling signs that the reforms, which began in earnest on 1 April, have smuggled into the health service not so much an appetite for privatisation, but for competition. On the day the government responded to the Francis report on the Mid Staffs care scandal, Monitor, the NHS economic regulator, produced its long-awaited report into creating a level playing field to allow private firms to compete with the health service. Monitor argued it was unfair that the NHS could borrow money cheaply through government debt while private firms faced onerous market rates. The solution: get the department of health to publish how and when it could make NHS borrowing "risk reflective" – that is, more expensive.

The Office of Fair Trading (OFT) has also said it will be reviewing all NHS mergers involving foundation trusts. In a first, earlier this year, the boards of Royal Bournemouth and Christchurch hospitals and Poole hospital foundation trusts were told their plans would be referred to the Competition Commission, after the OFT said the merger would leave patients and commissioners with "few realistic alternative providers". When University Hospitals Bristol foundation trust and North Bristol trust decided to swap services, the Co-operation and Competition Panel, within Monitor, this month concluded it could be anti-competitive.

So the Trojan horse of the government's reforms is a policy of competition, which is creating barriers to reconfiguring services – something all experts agree is key to making the NHS more efficient and safer.

Paradoxically, in a report released last week on worldwide trends by KPMG, it was not competition but integration that most global health leaders thought would improve patient care and save money. Little wonder that Ed Miliband champions stitching together social and health care. In an NHS where GPs are expected to procure better care for less, the report, written by former NHS high flyer Mark Britnell, quotes Sir Ian Carruthers, who ran the health service in south-west England: "We know that we now have to do it on a larger scale … yet we do not yet know how."

Health remains a quagmire for this centre-right government. The reason lies in the past with Margaret Thatcher's instincts laid bare in recently released cabinet office papers, revealing an aim in 1982 "to end the state provision of healthcare, so that medical facilities would be privately owned and run, and those seeking healthcare would be required to pay for it". When this was leaked, Thatcher retreated to say the NHS was "safe with us" – a claim that every Conservative leader since has felt compelled to repeat. In that sense we are all socialists now.