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It is definitely not the host's level. I've played with lower levels and it absolutely scaled up beyond their level.There's no scaling, I believe. The host's level dictates it IIRC. If not, it's the highest level in the group.
In free roam, you will find a lot of enemies that are level 25-30 even if you are 30 though, so it probably had nothing to do with him and his level.Partied up with a friend yesterday, and he was around LV26. We were finishing all of his Encounters, and he was making enemies scale down to his level as host. This is free roam, though, and I have not done a story mission without me being the host and ramping the difficulty up to Hard.