To be honest, the economics of subsidised smoking cesstion do add up. At the moment tobacco excise is bringing in a bit over €1bn and you can add on a few hundred million for VAT. The HSE estimates that it currently spends between €1-2bn in treating tobacco related diseases so the state isn't exactly making a profit on the back of smokers.
Another point to consider is that about 25% of the cigarettes consumed are non-Irish duty paid, ie smuggled or purchased legally from within the EU. The state isn't getting any money from these but still has to pay to treat the smokers health problems.
If smokers were to be very obliging and just drop off with something quick and cheap like a heart attack it'd be great but in practice they end up with COPD or diabetes as well as the range of cancers or needing statins etc at an earlier age because of their additional risk factor for heart disease and stroke so the costs of treatment can drag on for a very long time.
As for health insurers picking up the cost of treating smokers, that's really just other health insured people picking up the cost through their premia, and they certainly haven't benefited financially from smokers.
On average it costs €7,700 every time a smoker is admitted to a hospital in Ireland with a tobacco related disease. That would pay for quite a lot of Nicorette gum!