Exhaustive check fails to narrow type when union has only 1 type

[Freak613]

TypeScript Version: nightly

Code

  type SkippedError = {
   tag: "Skipped"
 };

 const error: SkippedError = {} as any;

 switch (error.tag) {
   case "Skipped":
     const a1: SkippedError = error;
     return 1;
   default:
     const a2: never = error;
     return 0;
 }

Expected behavior:
Exhaustive check should narrow error type to never for a2.

Actual behavior:
Type 'SkippedError' is not assignable to type 'never'.(2322)

The type of error at the a2 is still SkippedError

• I included happy-path variant of same code in playground link, where union for error has 2 types and code works correctly.
• The problem reproduces not only for literal types, but also with classes.
• Trying to narrow type with if has same result.
• Only working solution in this case is checking classes with instanceof, but can not be applied for literals.

Playground Link: Playground Link

[MartinJohns]

when union has only 1 type

What union? You don't have a union type.

Duplicate of #16976.