President Clinton has announced that one of his top priorities when the next Congress convenes is passage of a "Patients Bill of Rights"-a lofty phrase that really means imposing new regulations on the health-care industry. We're told this is necessary to prevent HMOs and other managed-care companies from denying medical coverage and scrimping on care. But watch out: The president's cure could be worse than the disease.

Regulating health care comes at a heavy price. A study done earlier this year by the Galen Institute found that in the 16 states that passed strict health-care regulations in the early 1990s, the number of people with no health insurance went up eight times faster than in the rest of the states. That's the trade-off: More coverage for some, no coverage for others.

Of course, this inconvenient fact won't stop the president and some Capitol Hill lawmakers from trying to do at the federal level what failed so miserably in the states. But what's most frustrating is that there's a perfectly good alternative to more government meddling in the health-care system.

Start with a question: Why do Americans get their health care from HMOs and other managed-care plans in the first place? Because that's what their employers provide. And why do employers provide health plans for their workers? Because it's cheaper that way. Here's why.

Under the current tax code, health insurance purchased by employers is tax-free. Health insurance purchased by workers is not. For a typical family of four, it costs the employer $700 less to buy health insurance than it would cost the family. That's why most people get their health insurance from their boss.

But what if the government gave individuals the tax break instead? Then families would be free to buy the kind of health insurance plan they want and need, rather than a plan chosen for them by somebody else. Employers could get out of the business of providing health insurance altogether (and give workers higher wages instead). Families would regain control over their health-care decisions.

Some people would still choose HMOs to save money. Others would opt for old-fashioned "fee-for-service" plans where you pay more but get to see any doctor you want and have no restrictions on what treatments are allowed. The point is that families-not employers and not managed-care companies-would be in the driver's seat.

This is how it works in the Federal Employees Health Benefits Program (FEHBP), which covers nearly 9 million federal employees and retirees and their dependents. Participants can choose from 350 health insurance plans nationwide. Competition keeps costs comparatively low, quality high, and customers happy. If such a plan is good enough for Teddy Kennedy and the other members of Congress, shouldn't it be good enough for the rest of us?

To understand how crazy the current system of health insurance is, just imagine if Americans were forced to get their car insurance from their employers. Bosses would try to clamp down on costs by shifting workers into "managed car repair." You'd have to take your car to a "gatekeeper" mechanic who would decide whether the problem was severe enough to see a specialist. Then there would be a struggle over whether coverage should be expanded to include oil changes.

Of course, we don't get our car insurance from our employers. We buy it ourselves with our own money, and if we don't like one insurer we're free to switch to another. That's why nobody's clamoring for a "Car Owners Bill of Rights."

Maybe it's time we tried the same approach with health care.

Edwin J. Feulner is president of The Heritage Foundation (www.heritage.org), a Washington-based public policy research institute.