I note that Apple is making a contract with you (as clearly stated by them up front) to share your HEALTH DATA with 3rd parties.
The widely publicised Health app collects health data through the transparent process of ASKING YOU FOR IT. If you don't want that data shared with other widely publicised health-related apps and services then don't type it in and don't press the buttons that share it.
Also, you already know your device collects health data, because you are already using it for that purpose. The T&Cs just ensure that everyone understands that you are putting your health data on their services, because they are legally required to get your permission.
The health applications which I use all require me to authorize data useage by other applications, which in my case is the Health app. You have to authorize the collection of data from these applications in the Apple Health app as well. As for 3rd parties, such as your healthcare provider, this has to be explicitly authorized. The legal terms are there so these exchanges can happen.
I have not seen any reports of Apple sharing any Health data with 3rd parties which were not individually authorized. You have to balance the convenience of your health care or other provider being able to see all of your data versus any privacy issues. The latter might include:
1. Apple sharing data without your permission. Highly unlikely. Look at the uproar about CSAM, which is a very public discussion so no stealth involved here. If it is eventually implemented you will have been warned.
2. Loss of your phone by someone who is able to access all of its data.
The bottom line is if you don't want any vulnerability just don't keep your health data on your phone. Personally I don't worry about it as I trust Apple, although I am disturbed about CSAM.