you have to go in the DEF file of the lifebar and find the variable that controls the size of portrait and reduce it by 2.
I don't know how your DEF looks like but here is an example of DISSIDIA lifebars:
;================================================
;- Single Face -
;================================================
[Face]
;--------------Player 1
p1.pos = 0,20
p1.bg.spr = 50,0
p1.face.spr = 9000,10
p1.face.facing = 1
p1.face.offset = 0,0
p1.face.scale = .25,.25
p1.face.layerno = 2
;--------------Player 2
p2.pos = 1280,20
p2.bg.spr = 50,0
p2.bg.facing = -1
p2.face.spr = 9000,10
p2.face.facing = -1
p2.face.offset = 0,0
p2.face.scale = .25,.25
p2.face.layerno = 2
;================================================
;- Simul Face -
;================================================
[Simul Face]
;--------------Player 1
p1.pos = 0,0
p1.face.spr = 9000,10
p1.face.facing = 1
p1.face.offset = 0,0
p1.face.scale = .25,.25
p1.face.layerno = 1
;--------------Player 2
p2.pos = 1280,0
p2.bg.facing = -1
p2.face.spr = 9000,10
p2.face.facing = -1
p2.face.offset = 0,0
p2.face.scale = .25,.25
p2.face.layerno = 1
;-----------Player 3
p3.pos = 4,0
p3.face.spr = 9000,0
p3.face.scale = .4,.4
p3.face.facing = 1
p3.face.offset = 218,4
p3.face.layerno = 1
;-----------Player 4
p4.pos = 1232,0
p4.face.spr = 9000,0
p4.face.scale = .4,.4
p4.face.facing = -1
p4.face.offset = -170,2
p4.face.layerno = 1
You will have to change the value more than once as Mugen can have up to 4 characters. Or you may have to do it twice only. It depends of you lifebars.