Will iOS 26.3 upgrade affect iPhone 14 battery health?

An update might drop 1% to 86%, but it might do that anyway. Apple use an advanced smart algorithm to determine battery health. The algorithm is occasionally recalibrated by both the device and updates to produce more accurate results over the life of the battery.

"Battery health" is an estimate of the ability of the battery to store charge. You are asking how much it will consume, which is not the same thing. I think in terms of how quickly the battery charge will be used, it could go either way. Apple could introduce features which may use more electricity, or they could improve some so they use less. Somebody would have to do very controlled tests to determine that unless there is a huge difference indicated by everyday use.