The Federal Health Minister says consumers are not getting value for money from their health insurance policies, and conditions should be changed.

Half a million Australians ditched or downgraded their private health insurance in the last financial year. Health Minister Sussan Ley says it is because policies cost too much and do not deliver value.

Federal Government figures show the number of non-exclusionary – “all inclusive” - private insurance policies with hospital cover fell by 500,471 to 3.5 million in 2014-15.

Meanwhile, the number of health policies with hospital cover that exclude certain medical services and require patients pay an excess and co-payment has increased by 558,619.

Ms Ley has launched an online survey asking if premiums should change depending on a person's smoking status, age, gender or “health risk factors”.

Opponents have spoken out already, accusing Ms Ley of trying to reduce the inclusiveness of health insurance and damage the idea of universal health care.

“We're not afraid of asking those tough questions,” Ms Ley said.

“Everywhere I go, consumers, patients, private health insurers, doctors, private hospitals are all telling me that their needs are not being met by the current rules and regulations and the circumstances of private health insurance.

“This is something we need to fix,” she said.

There was immediate concern that existing policy-holders would be slugged even though they were unaware of the risks of activities like smoking when they were younger.

Labor and the Greens have signalled similar concerns.

Labor's health spokeswoman Catherine King said Ms Ley was “clearly opening the door for health insurance to be levied on the basis of risk”.

“If the poll endorses charging smokers more for health insurance, how long before the Government moves to look at charging people more based on their age, weight, alcohol consumption, general fitness, genetic testing or family history of cancer?

Greens MP Adam Bandt echoed similar concerns.

“I'm concerned in general that we're moving away from having a universal health system in this country,” Mr Bandt told reporters in Canberra.

The debate comes just a few weeks after the Australian Competition and Consumer Commission (ACCC) reported that Australia's private health industry was too complex.

The regulator says the complexity drives consumers to lower-priced policies that lack adequate coverage.