Background:
Tobacco consumption precipitates ill-health and the financial cost of increase in demand for medical care can be substantial and catastrophic, especially for households in the lowest income stratum. This paper extends what is known about the poverty impact of tobacco use by estimating the increased risk of incurring higher catastrophic health expenditure as a result of tobacco consumption.

Methods:
The data for the study was drawn from the Harmonized Nigerian Living Standard Survey (HNLSS) conducted in 2009/2010 by the National Bureau of Statistics. In predicting the health expenditure attributable to tobacco consumption, two log-linear models of tobacco consumption were estimated. The experience of catastrophic health expenditure (CHE) was estimated using the standard 40 percent threshold of household total non-food expenditure.

Results:
Smokers had higher health expenditure (46.5% and 44%) compared to non-smokers for the two models estimated. Excess average health expenditure attributable to tobacco consumption was highest among smokers that are moderately poor and lowest among non-poor smokers. Also, extremely poor smokers incurred higher medical expenditure attributable to tobacco consumption compared to non-poor smokers. Excess medical expenditure attributable to tobacco consumption increased the burden of CHE by 3.83% among households living in rural location. Likewise, non-poor households experienced CHE, 23.87% for households in rural settings and 13.62% for non-poor urban residents.

Conclusions:
Essentially, due to the sub-optimal nature of health care financing infrastructure in Nigeria, smoking will aggravate the financial hardship of households as a result of increase in out-of-pocket payment for health care services in the short and long run. Therefore, with health care policy makers battling to increase the coverage of social health care financing, policies that curtails tobacco consumption are highly supported by the evidence provided in this study.