The threatened NHS has been much in all our minds this week, and, pestered by online petitions and appeals for support, I've been going over my long relationship with it. Our experiences of the NHS are woven deeply into the fabric of our lives, and most of mine have been good. All my children were born and cared for on the NHS, and have been well served by it. And for those nearing the end of life, my GP used to bake and ice a cake for each of his patients who reached the age of 100.

It has been a recurrent theme in my fiction, as it has been an integral part of my life. The narrator of The Millstone (1966), a young unmarried mother, in a central confrontational scene, actually delivers herself of the line "I love the National Health Service", while insisting on access to her sick baby in Great Ormond Street hospital. How things have changed since then, and sometimes for the better. When I went to visit my granddaughter a few years ago, as she recovered from minor surgery, the atmosphere was festive. Our generation of mothers had complained, we had made ourselves heard, and life on the wards had improved. That's how it worked, and should work. It is for us, it is ours, and the professionals do listen.

And now we seem to be on the brink of losing all of this. It isn't wholly unexpected. I predicted creeping privatisation in my 1996 satirical condition-of-England novel, The Witch of Exmoor, written at the somewhat ridiculous and squalid end of the failing Major government. We had already become wary about the selling off of public assets and services into private hands – gas, water, prisons, railways. One of the novel's more sympathetic characters, an advertising man, works for a firm which is given the task of updating "the corporate image of the National Health Service".

"Update is the word that is used: alter is what is meant. It has become clearer, as we approach the end of the 20th century, that we cannot afford a National Health Service for everybody, all the time. Some may have kidney transplants and some may not. Some may have their varicose veins tended, and some may not. Some may live to be 90, and some may not. So we must alter the perceptions of the people. We must adjust their expectations. We must encourage private health insurance ... We must reassure the rich that they have a right to what they want provided that they pay so much for it that the surgeons, the anaesthetists, the insurance brokers, the insurance companies and the shareholders all get what they want too. And they want a lot ... This makes healthcare very expensive indeed, and ever more inaccessible. There is no justice, no equity in this situation. Nobody would choose this if their eyes were veiled by ignorance, for each of us knows that we may pull the short straw. We can't all imagine being poor, but we can all imagine being disastrously, expensively, prohibitively ill."

The reference in this passage to John Rawls's classic concept of the "veil of ignorance" – which encourages us all to imagine in what kind of society, under what kind of healthcare regime we would choose to live if we knew we had to choose a personal outcome blindfold – haunted me much at that time, and still does. We know we wouldn't choose the pre-Obama US system, with its ludicrous insurance premiums and its neglected multitudes. I think we would all cling to the NHS, that brilliant and beautiful construction that has meant so much to my generation. You could call it an irrational devotion – I was struck by the reference, in Julia Langdon's recent fine obituary of Susan Crosland, to the way she had bought her husband Tony Crosland's politics "like someone buys a watch as a work of art because the mechanism is so beautifully constructed, and not because it tells the time particularly well." Yes, maybe we were emotional, irrational in our devotion. But in our time, the NHS did serve us well, and we long for it to continue to do so.

Some of us old lefties were tempted to believe David Cameron when he said the NHS was safe in his hands, its funding ring-fenced. We weren't persuaded to vote for him, but when the coalition came to power we hoped for the best. Cameron had shown himself human and vulnerable through his son's illness and need for years of care, he seemed to know there were some things money can't buy, and he had said all the right things about doctors and nurses. He looked eager, young, well-meaning. The Lib Dems also ought to have been reliably NHS-friendly – had not the Liberal Party been at the forefront of its creation in the 1940s? Neither party had put anything about radical NHS reform in their manifestos – quite the reverse. Yet today we find this friendly summer coalition combining to present us with a package of proposals that is causing alarm throughout the electorate and the medical profession – except, perhaps, in the bosoms of those super-doctor-banker GPs who are looking forward to the £300,000-a-year salary predicted in a Guardian report earlier this week.

We know that demands on the NHS have increased enormously in the four decades since The Millstone was written. Expectations are higher, patients are less patient, more and more miraculous interventions have been discovered. We concede that mounting claims on the NHS compel constant reviews of funding and assessment of what is value for money. Triage is necessary (the heroine of one of my late novels, The Red Queen (2004) is writing a book on "Triage in the NHS", a clear sign that the problem had been preoccupying me for some time), NICE guidelines are necessary, some new drugs are extraordinarily costly, we cannot have everything for free. This is not a new problem. In the 1990s, I interviewed various people in the healthcare business, and was persuaded that we ought to take more seriously the notion of compulsory health insurance, as required by some successful European health services. This wouldn't be a private BUPA-style scheme, a speculative, competitive, for-profit scheme, but a basic insurance to top up the National Insurance we'd all been paying for years anyway.

Some of the private insurance people I met while researching my fiction were amazing. They were like those time-share salesmen in the Canaries who try to tie you into contracts that make you go on paying for nothing long after you are dead, while persuading you it is all in your own best interests and an amazing bargain at that. Nobody can have failed to notice the recent rash of pale-blue Bupa adverts in newspapers, magazines and on hoardings, where smiling, carefully posed and chosen models assure you that all will be well if you sign up now. Join Bupa and you will never die. If most of us belonged to private health schemes, in that pale blue but slightly menacing world, the insurance companies would be a lot richer, and the NHS could concentrate on the unprotected and the indigent. Is that the plan?

Of course, those who can afford it may feel safer with private health insurance. (I've never had any and never will, unless everybody else has to by law, in which case I would pay my share willingly, as I pay my taxes.) Some in regular employment get a package that includes insurance as a taxable benefit. But what will happen to the rest of us, if the NHS fails us, if we get increasingly – as we will – a two-tier service, for the rich and the poor, for the insured and the uninsured?

I am not clever enough to be able to read the government's real agenda, and I am sure the government hopes that most of us are even more stupid than me. But I have been tipped off to look out for affordability expert Paul Kirby, new head of policy development at No 10, and author of a paper called Payment for Success. Mr Kirby believes in promoting the "disciplined freedoms enjoyed by the private and voluntary sectors in real markets, where organisations are financially disciplined by the need to earn their living from paying customers by beating the competition". His argument seems to imply that contracts will be awarded to "any willing provider" on a cost basis, surely a dangerous notion – we wouldn't hire a builder to fix our roof on that basis, let alone a doctor to fix our heart disease, or a nurse to tend our dying mother.

The spirit of commercial competition and the motives of financial gain are not appropriate to a health service, and phrases like "beating the competition" have no place in it. The true spirit of the NHS was a treasure beyond price, beyond valuation, and it has been one of the glories of our time, one of those great ennobling concepts that changed the way we live and feel about ourselves and our country.

The NHS cannot be perfect. We all know true stories of patients who feel forced to go private because of inadequate diagnoses, or who seek specialist interventions not readily available. We know of elderly people who would rather die than be put back in hospital. Susan Crosland herself, like me an emotional believer, contracted the superbug MRSA in a London NHS hospital. Her faith had not inoculated her. But it is my conviction, as a committed "consumer" of NHS healthcare, that during my lifetime the NHS has improved. I would like to think that The Millstone played its small part in improving the way parents and children are treated. We cannot throw all this away in favour of an American system where you can't cross the threshold until they've swiped your credit card.

Doctoring the books: John Mullan on the NHS in literature

Sarah Waters - The Little Stranger (2009)

The best fictional account of the dawning of the NHS is in a recent novel. Dr Faraday, the narrator, is a gloomy, middle-aged Warwickshire GP, trained in an age when a doctor had to compete for well-to-do patients with oleaginous fellow practitioners. Yet he dreads the state-funded system, which he thinks will put him out of work. In an epilogue, we find him doing very nicely, thank you.

Lucilla Andrews - The Quiet Wards (1956)

Former nurse Andrews was the doyenne of NHS romance. In this one her heroine Gill is a nurse in a large hospital. Disaster looms when, under work pressure, she forgets to lock up the drugs cupboard and pharmaceuticals go missing. Will she save her career? Which of the doctors who fancy her will she choose?

Richard Gordon - Doctor in the House (1952)

Gordon's comic novels were hugely successful in their time – they were turned into a series of films starring Dirk Bogarde – and they are still in print. The author was really Gordon Ostlere, a former anaesthetist and ship's surgeon. His accounts of life at St Swithin's, a fictional London teaching hospital, make the NHS seem harmlessly blundering and the doctors self-deprecatingly noble.

Muriel Spark - Memento Mori (1959)

In Spark's scathing fable, the egalitarianism of NHS care is anything but consoling. The 12 occupants of Maud Long Medical Ward "(aged, female)" are all called "Granny" by their competent but mildly uncaring carers. The nurses make jokes about being remembered in their patients' wills.

Penelope Lively - Moon Tiger (1987)

Claudia Hampton lies dying in a London hospital, and the novel follows her memories. As her mind wanders, the doctors and nurses regard her with tolerant bemusement. NHS care is both uncomprehending and exemplary. "Upsy a bit, dear, that's a good girl – and then we'll get you a cup of tea." And she gets a room all to herself.

Ian McEwan - Saturday (2005)

Literary fiction meets high-octane techno-medicine. McEwan's protagonist is neuro-surgeon Henry Perowne, who lives within walking distance of the nearby NHS hospital. His surgical minions are eccentric or tetchy, but professionally brilliant. In the last chapter he performs some bravura brain surgery to save the life of a man who earlier threatened to kill him. And all for free.