Health or Mental Integrity is the overall physical and psychological wellbeing. In the context of the Telepath games, health is equal to the amount of damage a unit can take before dying or otherwise be defeated. Health is increased by increments of two when Psy Defense is upgraded.
Health is able to be replenished through the use of psychokinetic shields, such as Mind Shield. Human Psy Healers can even learn how to increase the maximum health of with a unit with a Static Shield.
In all of the games, the teammates of the protagonist can have as many health points as one wishes, meaning that the Psy Defense stat can be trained as much as one wishes.
This rule doesn't apply to the protagonist as well, though. In TRPG 2, TPA1 and TPA2, the main player's health cannot normally exceed 99 points; thus their Psy Defense stat is meant to be maxed out at 50. The only way to achieve a health higher than the 99 limit is by having a Psy Healer to use a Static Shield on the main player, which is only possible in TPA 2. The same is also true for Duvalier in Telepath RPG: SoG, except his health can reach 199 health points requiring 100 points of Psy Defense. The blood orb cannot be used to get around the max health limit.