Do you want rewards as a means of getting good outcomes, or as an end in itself?

I can see that private health insurance companies wouldn't want to take in bad risks. They don't in some US states, and are forced to by the federal government in others, I can also see that a profit driven GovCo would behave like a giant private insurer. But actual in-GovCo governments are incentivised to provide universally access to healthcare as they do to the law and education. I can vouch that where you have public healthcare, any hint that some group is excluded creates a stink. Health insurance provides better incentives than piecemeal provision, but public healthcare has better incentives than both.

I appreciate the point and agree with it, but in fairness to the financial prudence folks if the government were to start executing citizens that would have major costs down the line. I would not expect a government concerned with financial prudence to do such executions if they were at all intelligent. It's cheaper to give unproductive people welfare than to round them all up and kill them, once you take matters of political economy into consideration on the accounting sheet.

Better aligned but not perfectly.

Better, of course, is still better than worse. "Perfectly aligned", I'd say, is an overly strong claim to make for anything in this mortal world, ahaha, that was not explicitly designed and verified to be perfectly aligned, or at least aligned in-the-limit of increasing resources.

Also it is largely a command economy setup.

There are countries with non-command economy public healthcare. I lived in one (Israel).

It's also important to note that markets, in the sense of allocatively-efficient combinatorial price-seeking and price-taking as such, are not the magic super sauce of Western economies as we know them. As far as economists were able to study, the magic super sauce is actually just allowing firms to enter and exit business as they please, enabling economic agents to plan reliably, and containing liability when things go wrong.

Command economies violate that first guideline, which takes away the ability of an economy to explore a combinatorially-large solution space in parallel.

The last problem was once "solved" via limited liability corporations, but nowadays bailout/hostage capitalism and the increasing financialization of Western economies has created a previously-unrecognized creature: distinctly capitalist economies defined by catering to a small number of agents who can punish everyone else with toxic liabilities when they don't get their upside.

The middle problem is where different societies have usually had to fudge things. A strong sense of private property often helps, but an overly strong institution of private property allows hostage-taking (as described above with banks, or as is the case with natural-resource rents, or as witnessed in any Bay Area urban planning meeting). Things like collective bargaining, universal health care, or Flexicurity seem to run against the grain of private property, but actually help increase the total planning reliability across society, and certainly people like having them. There doesn't seem to be a secret sauce for building institutional structures that give people the Freedom To Optimize.

There's a great chart of the popularity of tobacco, and of various modes of consuming it, on the first page of this paper:

http://cancercontrol.cancer.gov/brp/tcrb/monographs/8/m8_2.pdf

There's also a timeline of related events on page 16.

Peak tobacco use corresponded with the period where scientific studies were establishing that smoking causes cancer and various other diseases. It was several years into the decline of smoking popularity before "nonsmoker's rights" (i.e. measures against smoking in public) started taking off.