The fact that your employer pays $1700 a month for a Cadillac health care plan for you completely baffles me. Why would they spend that much money per employee on straight health care?
I don't really know, but as I hinted in the original post, my guess is that it's due to our braindamaged tax laws:
* Employer plans are tax deductible, while individual plans are not. In my tax bracket, that means I can get a $1700/mo plan for the same effective cost as a $1100 plan if I were to buy it using increased income and an individual plan. If individual premiums were deductible above the line, I'd rather take the $1700/mo in salary and buy whatever plan I actually needed.
* Avoiding the painfully retarded double taxation (dividend tax) by compensating owners through insurance.
* IRS Employee "equality" rules forbidding owners from having nicer insurance than employees.
* Avoiding non-deductible health care costs. For example, paying an extra $500/mo in deductible premiums instead of $500/month in premiums, copays, co-insurance (which still wouldn't be enough to reach the 7.5% rule).