Michael Moore's SiCKO: coming soon to a hospital near you!

Michael Moore's latest big screen documentary Sicko, which has just opened in the UK, is almost a paean to the NHS. But, asks Allyson Pollock, professor of health policy at Edinburgh University, how long before the sort of privatised US-style system Moore that hilariously - and frighteningly - lampoons replaces it?

Viewers of Michael Moore's new film will come away convinced that the public healthcare system in this country is superior to its privatised American counterpart, where more than 50 million people are without any kind of care at all. But does the government agree? Or has it instead been taking ideas from the very system revealed in Sicko to be so iniquitous?

The film is very much made for a US audience. Moore does not go into the huge changes that are taking place in European healthcare - and the new, privatising project going on here. It might surprise many British people who see the film to know that, for example, the British government has for years been in contact with Kaiser Permanente, one of the big US healthcare corporations, and is actively trying to remodel the NHS along American lines.

All the reforms carried out by the government over the past few years have been aimed at that.

Private Finance Initiative

In 1995, civil servants from the Department of Health, fresh from visits to the US, thought they had found the future of the NHS. They invited Kaiser Permanente to look at whether it could deliver health services as part of the new Private Finance Initiative in the NHS.

The PFI is a building programme of public infrastructure that brings with it a long-term debt that the government takes out from a private company. But as the medical director of Kaiser Permanente, which is both an insurer and healthcare provider, told me at the time in her marbled headquarters in California, the NHS was not yet ready for Kaiser. Such a system, built on public ownership, control and accountability, was closed to commercial companies. And it was the same story for the whole of Europe.

But Kaiser Permanente, which, along with the rest of the US healthcare industry, was known as one of the "darlings of Wall Street" because it made so much money, was restless. It wanted to make more, and had its eye on the rich pickings of European tax funds. And where better to begin than by conquering the UK's "socialised" NHS, so long the model for much of the world?

Kaiser Permanente didn't have long to wait. In 1997, the Labour administration swept away the last remaining obstacles to PFI and, in so doing, established the laboratory for the great market experiment in public services.

'Stalinist' NHS

The accumulated neglect and backlog in maintenance and repair became an excuse to sell off NHS land and assets at knockdown prices. The NHS is now a tenant in hospitals it once owned, leasing back buildings and services from private sector landlords at astronomical rents that are currently consuming £500m a year and will increase exponentially.

The diversion of scarce funds from hospital revenues to bankers and shareholders has starved the NHS of cash, and the result has been a major downsizing. For almost every PFI hospital built, three hospitals close. Bed closures and staff reductions occur on an unprecedented scale.

Back in 1997, the NHS had major capacity problems. Waiting lists kept rising, accident and emergency wards were overflowing, public discontent was growing and staff morale plummeting. Tony Blair found a solution one night in 2000 as he was leaving the smart River Cafe.

He was introduced to Tim Evans, external affairs director of the Independent Health Care Association, the body that represented the private healthcare industry, who convinced him that the private sector had all the answers.

But the Labour government knew that a public sector NHS was close to the heart of most Britons, and a spin operation was required. So, from the start of the Labour government, ministers dismissed the NHS as Stalinist, a 1940s relic of socialism, bureaucratic and rigid.

BMJ editor's 'lucrative post'

Then, in 2002, the highly respected British Medical Journal published a paper purporting to show that Kaiser Permanente (them again) was more efficient than the NHS. Within hours, hundreds of emails had poured into the BMJ exposing the flaws in the paper, from the misleading nature of the claims to the authors' links to the company. But the BMJ's editor, Richard Smith, declined to retract the paper, correct it or publish a proper scientific rebuttal.

The paper had done its work. Its propaganda was cited and repeated everywhere by academics and policy-makers and, most crucially, by the government in its white papers and documents, including the Wanless Report. The much-despised US healthcare industry, of which Kaiser Permanente is a part, was to be the new model for Britain.

Not long after publishing the article, Smith left the BMJ for a lucrative post as chief executive of the UK subsidiary of the US health corporation UnitedHealth. There he joined its new European president, Simon Stevens, formerly adviser to every Labour health secretary, and Tony Blair, since 1997. The flow of ideas, from him and many others like him, was all one-way: from the US to the UK.

As adviser to Alan Milburn, health secretary from 1999 to 2003, Stevens and his American colleagues helped to shape the NHS Plan 2000. It promised to provide more money, doctors, nurses, beds and capacity. But in the event the funds were directed at building a new parallel system that would be owned and operated not by the people but by the private sector on behalf of shareholders.

The mantra of choice

Using the mantra of choice, the market was thus disguised. In primary care the government negotiated a new GP contract that would allow commercial companies to run GP services. There are now more than 30 corporations running GP services in England.

It was choice that was used to bring in the highly controversial ISTC (independent sector treatment centre) programme, spearheaded by Texan Ken Anderson, which provides mini- factories for elective surgery. Anderson headed the new commercial directorate of the Department of Health and quickly set about awarding £6bn worth of contracts to healthcare corporations, thereby undermining elective surgery, diagnostics, radiology and pathology provision in the NHS.

Local people from Portsmouth to Scarborough have been protesting against ISTCs draining scarce NHS funds, which has led to service closures and staff redundancies to balance the books.

There is not an area of the country where services are not being cut and closed. Protests against the closures of accident and emergency departments and hospital services are happening in Surrey, East and West Sussex, Kent, Worcester, Manchester, Leeds, Durham and Huddersfield; and against the 150 community hospitals in places such as Norfolk, Cambridge, Leicester, Devon, Marlborough and Bromley.

Where has all the money gone?

The NHS, the government says, has had unprecedented levels of funding - so where has all the money gone if it isn't into services? Is it really all down to bad managers and greedy doctors and nurses?

All markets need systems for pricing, billing and invoicing. Labour has introduced those: the electronic patient record, part of the £1bn IT disaster. The NHS too is being transformed from within.

Foundation trusts such as University College London Hospitals Trust have been given new powers to enter joint ventures with commercial companies such as the Hospital Corporation of America and to spend millions of pounds on advertising campaigns, PR agents, mega-departments of finance and accounting, press officers, management consultants and profits.

As in the US, billions of pounds, probably approaching 20% of annual NHS funds - estimated to be £20bn in England in a year - are being squandered on what are called the transaction costs of the market.

Earlier this year the US chief executive officer of UnitedHealth, Bill McGuire, was sacked along with other board members for repricing share options. His annual $126m package was not enough for him. Meanwhile more than 50 million Americans, including 10 million children, go without care - in the richest country in the world. Is this what we want?

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• Allyson Pollock is author of NHS plc: The Privatisation of Our Healthcare and professor and head of the centre for international public health policy at the University of Edinburgh.
• A version of this article first appeared in The Guardian newspaper.