How would I be able to subtract from a variable when it hits something? (OnCollisionEnter)

Yes, its quite simple.

a) Make sure the the character, and the collided object both have colliders attached.

b) Make sure that at-least one of them is a (non-kinematic) rigid-body, generally the character.

Remember that "OnCollisionEnter" will not work with the built-in "CharacterController" that comes with Unity. For that you will need to use "OnControllerColliderHit" instead.

 #pragma strict
 
 var Health:int =10;
 
 function OnCollisionEnter(collision : Collision) 
 {
 
 if(collision.gameObject.tag == "Monster")
 {
     Health = Health-1;
     Debug.Log("Health reduced to " + Health);
 }
     
 if(Health <= 0)
 {
     Debug.Log("Character died");
 }        

}