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"I also figured out a way to make the health appear near the player. Not sure if I'm going to keep this feature, but it does make it easier to keep tabs on how close you are to getting blown up."

How about a system where the health appears next to you for few seconds after taking damage, then fades away.

This way the player has an easier time knowing when they getting close to death, but you also don't have the numbers awkwardly following the player at all times.

Haha! Great minds think alike! This is actually what I was wanting to do all along!

But!

In order to do that, I'd have to figure out how to properly adjust alpha values to make the health transparent and fade away. 

I've also been thinking about getting rid of a numerical-based health counter and implementing a color-coded one: Green means you're healthy, yellow is beat up, red is close to death. This color will appear on a circle or square on the player ship, which will also happen to be the primary player hitbox.