When Obamacare launched, I estimated its design flaws would create a new crisis within five years. I was too optimistic. Just three years in, it’s falling apart.

The latest problem: insurance companies like Aetna (AET) and United Healthcare (UNH) are withdrawing from many state exchanges. They’re losing money despite sky-high premiums and deductibles.

Exactly why this is happening depends who you ask. The companies blame low enrollment. Only about 40% of those eligible to buy an Obamacare plan have done so – and they tend to have above-average medical expenses. Experts say it takes about 75% of the population enrolled in order to spread the risk between healthy and unhealthy people.

That hasn’t happened. Now we’re seeing the result.

Why are healthy people not buying the plans? Often it’s because they are so expensive, even with the tax credits. The value isn’t there - unless you are already sick. A vicious circle.

In theory, the Obamacare “individual mandate” was going to prevent this scenario. A gentle nudge from the IRS would convince healthy people to enroll. It has not.

Worse, the plans are now so expensive that much of the population is exempt from the mandate. You don’t have to buy insurance if the lowest-cost plan in your area would cost more than 8% of your household income. 

Whoever occupies the White House in 2017 will have to deal with this. Right now it looks like Hillary Clinton will win. What will she do?

For the answer, look back to 2008. Health-care reform was a big issue in that year’s Democratic primaries. Then-senators Clinton and Barack Obama both had similar plans. Their main difference: the individual mandate. 

Back then, Barack Obama was against forcing people to buy health insurance. He changed his tune in order to gain the insurance industry’s cooperation, but that came later. 

Hillary Clinton favored an individual mandate. In fact, she all but demanded it. She said the program simply could not work unless government forced people into it. It appears she was right.

The likely outcome is that sometime next year, President Hillary Clinton will team up with House and Senate Democrats to impose a harsher mandate, one with serious teeth and no exemptions. 

The sad part: it doesn’t need to be this way.

There are much better ways to make sure all Americans have access to affordable health care. We don’t need bureaucracies and penalties. 

Government being what it is – and Hillary Clinton being who she is – we’ll end up doing it the hard way.

Get ready. This one’s going to hurt.

Patrick Watson is an Austin-based financial writer and senior editor at Mauldin Economics. Follow him on Twitter @PatrickW 

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