The increase is applied to the base (rank 0) health of the Warframe, before health from leveling is taken into account.
Example: the base Health of a rank 0 Frost Warframe is 100. Once at rank 30, the warframe will have total health of 300, but will only gain 40 health from a standard Vitality mod since its base health is 100. The final result for a rank 30 Frost with a rank 0 Vitality mod will be (100)+(100*40%=40)+(100*200%=200)=340 health.
