Spooky! I like the analog horror / jumpscare images in the background.
I also agree that its awkward to move from the mouse for menus to buttons for the game part.
I like the concept. Make the player choose between two different forms of health, protecting your physical health by taking the penalty to your sanity. However the connection is not super clear (it took me dying about a half dozen times before I sort of figured it out) and I think rather than a static number, some kind of bar that fills up (like a heat based gun in an FPS) might be a better way to communicate the same idea visually. I didn't ever really have a good sense of how well I was riding the line of going insane. The number seemed to have only a very loose connection to how close I was to going crazy.