<edit> Honestly not as bad as I thought. But if this feels like just a theory post, skip to the bottom. </edit>
Every so often, I see an occasional GM bring up the problem of hit points. Or rather, make a problem out of hit points. Hit Points work perfectly well for what they are meant to simulate. People think about them too much, and this causes most of the problems.
However, there is one real problem. A lack of tactical consideration. For example, since your abilities are exactly the same at 1 HP and 999 HP, players consider every battle a race to the bottom. If you can kill the other guy first, you win, no matter what. This sort of thinking is perfectly fine if you don't care about the players accidentally mincing themselves when they all attack the Orc chieftain even though they have 2 HP apiece. But some cases are less clear-cut. For example, how are players supposed to know when to retreat?
Luckily, the fabulous Logan Knight from Last Gasp Grimoire already solved this problem years ago. Simply divide HP into two categories. He used Grit and Flesh, but I use HP and FS, with FS standing for Fighting Spirit.
The system works as follows. FS represents the magical part of HP, the part where the arrow hits you but doesn't punch a hole clean through you. HP represents the physical integrity of your body. When you take HP damage, you actually get injured.
There are a few minor rules to go with this. Firstly, FS always depletes before HP, and if you have 1 FS, the leftover damage doesn't carry over into HP. Secondly, some kinds of damage bypass FS, such as falling. These types are tagged as 'Inevitable'. And finally, if you have no FS, you attack at -4 and enemies get +4 to save against your spells, but anything that helps your defense is okay.
Also, one more thing. FS/HP is usually used to represent a near miss if an attack doesn't reduce you to zero. So why don't GMs describe it as a near miss? Couldn't you just roll for damage and then describe the Ogre's club swinging down and just barely missing the Rogue. I'm going to start doing that, and I'll see what the players think.
But since I'm linking this post to other places now, I think I will further explain how HP progression works in my game. Simply put, I stole everything from here. I then combined the system Arnold outlined with my own musings on FS. Simply put, once you have your Max HP at level 3, you won't gain anymore. But you will continue to gain FS until level nine, which is the soft level cap for my games.