Why does my battery health keep reducing

That is normal as a battery gets used.

Read this support article about Phone battery and performance to read about the battery health feature and what is considered normal performance --> iPhone Battery and Performance - Apple Support

"A normal battery is designed to retain up to 80% of its original capacity at 500 complete charge cycles when operating under normal conditions. The one-year warranty includes service coverage for a defective battery. If it is out of warranty, Apple offers battery service for a charge." A degraded battery may display the notice: "Your battery’s health is significantly degraded. An Apple Authorized Service Provider can replace the battery to restore full performance and capacity." If it is not at or above 80% "normal", consider contacting Apple about a battery replacement. --> iPhone Battery Repair & Replacement - Apple Support

Also read this post by ASC contributor Lawrence Finch which has a very user-friendly explanation of battery features --> Bettery health maximum capacity - Apple Community