How to defense equate to HP and damage dealt?

Defense mods vs Health mods - Prior to the defense update

Fives has one of the highest base armor in the game. So let's use him as the best case example:
The defense set bonus gives 5% defense. We are basically comparing 5% defense to 5% health. Factors to consider are that defense affects both protection and health by mitigating damage. Health % increase only affects the health pool.

The Diamond shaped mod has a fixed defense % bonus which every competitive player will have. Lets assume this is always on the character. Fives has a damage reduction of 27.18% with only this mod equipped.

Adding 5% defense changes the physical damage reduction from 27.18% to 28.06%.

This means before, Fives takes 72.82% of incoming physical damage.

After the set bonus is added, Fives takes 71.94% of incoming physical damage.

This added defense essential means he takes 71.94 / 72.83 = 98.8% of the damage he would otherwise have taken without the set bonus.

This means he his effective hp pool (prot + health) is 1.2% greater.

So for defense to be better under these conditions, 101.2% of health + protection needs to be more than 100% of protection + 105% of health.

When you work out the inequality, the defense is only better once we reach protection levels 3 x that of health. Even with max protection mods, it is almost impossible to reach these levels of protection with fives currently.

Special damage calculations make the ratios even more pronounced since resistance is almost always less than armor by default. Of course, other considerations like % health effects, healing also have an influence.
Btw, 5% defense on fives, equates to about 18 flat defense, it is significantly less for most other toons.

TLDR: Health is technically better in almost all cases. However, when you look at the absolute differences, you are looking at several 100 hp difference in the most extreme case scenarios. Hence, practically, just use whatever is more convenient for you.