This makes me wonder, in democracies there are stuff you simply cannot ban. What is the solution?
Smoking is more nuanced. For the most part (as long as public spaces and spaces with children are appropriately regulated), smokers hurt only themselves. In countries with public healthcare, this can increase care costs, but most studies now find that because smokers die much younger, their combined lifetime costs are actually lower. Old people are very expensive to care for. So the question becomes: to what degree do we want the state preventing people from hurting themselves? Where does that authority end? Alcohol? Sugar? Fatty foods? Less than eight hours of sleep? Not exercising? Too much TV and iPad? Social media? Not reading enough books? This is, IMHO, a slippery slope. For reasons of ideology and pragmatism, I do not support regulation for "victimless" activities, unless there are significant social costs/harm. This means I support legal tobacco, marijuana, MDMA, alcohol, and and many other drugs. I also support the right to partake in extreme sports, eating junk food and sugar, and not exercising.
The implications of this particular study are very difficult to morally and legally navigate. If smoking while young can make children age slightly faster, surely there is a moral imperative to prevent those who are 15 and younger from smoking? I believe that is the case in most of the West already. However we also know that parents who don't exercise and eat poorly also tend to pass along these habits to their children. Should we also ban parents from eating at McDonalds?
You really have to force it to get hooked on tobacco. Dunno how many would bother without convenient access.
There aren't really _that_ many things which fall into the "clearly harmful, but people won't give them up" category; tobacco, alcohol, sugar, maybe meat (this one can be, and has been incessantly, argued both ways to an extent), would be the big ones.
Why do we need to ban them? If people want to smoke them, let them. The tax can take care of externalities.
(And I say that as someone who hates smoking.)
Alcohol appears to be going in the same direction.
Honestly, I dislike smoking as much as anyone else but I frankly oppose the way Australia is taxing cigarettes and alcohol. These are sin taxes. They are high to deter people from doing things they want to do. That's overreach.
Taxes should aim to cover externalities. That's fair. Your choice forces a burden on the collectivity which it's trying to recoup. Above that, that's just coercion and paternalism. Plus it disproportionally affects the poor but I guess the moral police pushing for this kind of taxes sees that as a benefit.
Even if you have the most addictive substance on the planet, the black market puts an upper bound on how much you can tax it.
The taxation level that maximizes revenue or minimizes harmful noncompliance never satisfies the moralizing people who wanted the thing you're discussing (whatever it is) punitively taxed in the first place.
Externalities also depend on context. Eg your example of cheaper healthcare only works when healthcare is priced by pooling payments. If you have a system where an actuary looks at each case individually (well, a system designed by an actuary does) and assigns a premium, then it doesn't matter what other people are doing: you are paying for your own risk (and competition between insurance providers keeps the system honest).
See https://en.wikipedia.org/wiki/Prize_indemnity_insurance for a corner of that insurance market that works on the latter system.
Even if you insist on pooling, you could pool smokers and non-smokers separately.
Granted in many places regulations force health insurance providers to do the naive pooling where your statement can be true. Similar, or even more so, for pensions.