In more than 90% of areas the HLE was now below the state pension age of 66 or 67 and in one in 10 it was below 55.
The report said this had a significant impact on the ability of people to work and said this aligns with other figures showing high numbers out of work because of ill-health.
The global comparison, based on World Health Organization data, compared the UK to other nations in western Europe, the Nordics, North America and Oceania. It is now ranked 20th out of 21 with only the US seeing its population live for fewer years in good health.
HLE is the technical term used by experts for an estimate of how much of a lifetime is spent in good health, based on how people feel and report in surveys, as well as on mortality data.
The Health Foundation said the findings revealed a stark decline in the nation's health and that this should be a wake-up call for policymakers.
Andrew Mooney, the think tank's principal data analyst, said: "The UK has the highest levels of obesity in western Europe and there has been a surge in mental ill health, especially among young people."
This had created "a significant economic cost, with poor health driving people out of the workforce and locking young people out of education, employment and training", he added.
In comparison to HLE, the Health Foundation found that overall life expectancy had remained broadly stable.