Expensive hearing aids are not effective, but she hears well when she converses with a cheap $20.00 wireless phone handset. Why is this?

The $20 handset works better than the $5K hearing aid because the person is focused on hearing and responding to one source at a time.

All hearing aids are amplifiers, but the expensive in-ear ones are also microcomputers which select different levels of amplification for sound on different wavelengths and can be adjusted to compensate specifically for the wavelengths that the individual's own hearing has lost. You are getting some very clever technology for your money, but it's money down the drain if the job hasn't been done completely. There is more to hearing than making sound loud enough.

For hearing aids to work to their maximum potential, you need:
a motivated wearer
a conscientious audiologist or technician
supportive communicators helping the wearer
time
practice
a practical understanding of what is happening in a) the environment; b) the gizmo; c) the ear; d) the brain.

As my kind and insightful cousin pointed out to me, putting in a hearing aid is not like putting on a pair of glasses, it's far more like switching on increasingly bright lights. At first the aids don't bring sound into focus, they just make it louder: this is why wearers often find them incredibly uncomfortable and stop wearing them. Just think how many millions of dollars are sitting in little boxes at people's bedsides!

Because older people and their caregivers can often be somewhat pessimistic about the whole project, they tend not to read the instructions and not to follow their providers' directions about re-training the person's hearing. It is very hard work, it is fiddly and laborious and often disappointing at first, and they're not convinced they'll get good results. So they spend the money almost as a grand gesture, and then give up.

It's also often left too late: people resist getting their hearing tested and resist having to wear aids. By the time they do, they face an uphill struggle to restore worthwhile function and of course it's true that sometimes it simply won't be possible. [I'm guilty myself. Having been driven round the bend by both parents' deafness I did swear that I would get my hearing checked at 55 whether or not I had any problems. I'm now 58 and still planning to "get round to it."]

I'm currently reading David Eagleman's book "Livewired" subtitled "the inside story of the ever-changing brain" which includes a pacy section on how the brain responds to inputs by devoting more "territory" to richer sources. The relevance of this is that as hearing weakens (so you get less audio input), the brain gives less and less territory and attention to sound as an information source: i.e. you get worse at hearing. Increase the sound and you don't get immediate improvement because the neural pathways for hearing are disused and overgrown - you have to rebuild them, and that's what takes the time, effort and discipline, daily exercises in active listening, increasing in length every day.

Is it worth it? Well, yes. If nothing else, it gives the person something constructive and positive to do, and the rewards can be made very concrete - e.g. enjoying a favourite piece of music, joining in a song, listening to a loved one's voice.

On the other hand. If you are in your nineties and very tired, I think you are also entitled to think "nuts to it. I tried" and ask people to write stuff down instead.

If the hearing aids only have a small cone insert, they won't work as well. Make sure the hearing aids are made with a custom Ear mold. My father could only hear better with the hearing aids when a custom mold was made that was shaped to the area of the ear where the cone goes inside. That made the hearing aids work better.

My mom, too, heard just fine with the phone, and I assume it's because it was right up against the ear and not bringing in outside noises like a hearing aid would.

Eventually my mom wouldn't wear her hearing aids, and I'd swear she heard better without them because we just had to get closer to her to speak, thus eliminating the extra noise.

dhalpern: Imho, an appointment with her audiologist should be scheduled who can better answer this question as a medical professional.
I have been a one aid wearer for almost two decades. I never had a problem even after I underwent tympanomastoidectomy surgery in that ear.

Be thankful that something works. This is a common complaint.

A hearing amplifier wourks well for my mom. And harder to lose. Amazon had a simple one with just an on/off button and a volume wheel. I bought her a cheap sony headset too which she likes better than the in- ear attachment.

My mom needed custom inserts to get her aids to fit well. Her ear canals were shaped oddly and somewhat collapsed. Are the inserts staying clean? If clogged with ear wax, they will not work at all.

This is weird and my DH has worn hearing aids since I met him 50 yrs ago. I would call her audiologist and ask that question. My DH had problem changing over from analog to digital. He was told with analog you hear a persons voice the way it sounds to everyone. With a digital, the sound is mechanical so doesn't sound right. You need to wear the aid regularly for your brain to get used to the digital. He was told that he may hear better on a cell phone with the speaker on. He does hear well with our cordless with the volume as high as it will go with the boost button.