Do they also charge people who drink, are overweight, don't exercise? Seems odd to only single out smoking.
Smoking is binary, so you can easily price for it.
Inhaling smoke isn't good for you.
(Also, if true, that still makes smoking not a binary)
Sure. Neither is being overweight, which is just as measurable as nicotine use. (Probably more measurable, since you can't easily lie about being overweight.)
It's the reason I've personally ceased my "smoking when drinking" habit.