I think the difficulty setting should work like this:

Easy:
HP of the player characters 125%
HP of the enemies 75%
Cooldown of enemy skills +2 turns

Normal:
HP of the player characters 100%
HP of the enemies 100%
Cooldown of enemy skills +0 turns

Hard:
HP of the player characters 75%
HP of the enemies 125%
Cooldown of enemy skills -2 turns