An unhealthy battery IS covered under warranty. Apple will gladly replace it if it fails a hardware test. What they won’t do is give you a free battery 3 years after you purchased the phone.
Except everyone’s phone battery pre-iOS 10.2.1 *was* failing a hardware test, that being they had degraded enough that the phone could not reach its advertised speeds (2x faster every generation, blah blah) without crashing. And rather replace everyone’s battery at the 11 month mark, Apple changed the rules of the “hardware test” without telling anyone.
I’m fine with the current capacity of iPhone batteries. It’s the fact that they degrade so quickly, for whatever reason, that makes people say the battery should be bigger. Just to be a buffer for when they start to degrade. But Apple has made a jump in battery technology before. I remember the first 2008 unibody MacBook Pros, when Apple first made batteries with a 1000 cycle life vs 300. It’s been 10 years since then.