issue
right now the difficulties are increasing challenge by taking away power fantasy (decreasing player's health and damage values). difficulties above minimal severely lack power fantasy aspect, despite providing more engaging challenge.
solution
instead of this, make the difficulties increase challenge by duplicating enemies and/or changing enemy variant spawn proportions, they would increase difficulty without removing power fantasy aspect (like in Helldivers). higher chance for larger enemies would be a more hardware-friendly alternative i believe, if that's your concern.
if you really want to keep this way of having difficulties, you could at least make custom difficulty with customizable values (health, damage, enemy numbers, large enemy spawn likelihood, enemy aggression, down amount for mortal wound, respawn timer etc.), and let those who select it (or quick match) be able to join custom difficulty lobby thru matchmaking.
I've posted a thread here explaining why this fix is so needed.
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