New Zealand has publically funded health care. If the government can force me to pay for your medical treatment (via tax), why is it a stretch for them to prevent you from running up those costs by engaging in self destructive drug use?
In any democracy, the voting public should choose how tax money is spent. If the majority don’t want to pay to manage smoking related illness, or pay to enforce a two tiered medical system, a democratic system would restrict or ban smoking.