Why Hearing Aids Cost So Much
The factors that contribute to the high cost of hearing aids are varied and complicated; however, we can boil them down to a few key areas. If you ask someone in the industry, they’ll write off these costs as a necessity due to the highly advanced technology involved in the devices. Yet when one digs a bit deeper, it becomes clear that there are several other contributing causes.
From the days of 13th-century ear trumpets, assistive hearing devices have come a long way. Today, a person can find hearing aids that feature Bluetooth streaming, selective frequency amplification, and adjustments that can be performed from an iPhone. Incredibly, all of this is packed into devices that can fit snugly (almost invisibly) into one’s ear canal.
However, at the end of the day, a hearing aid is essentially a highly advanced and specialized microphone, which begs the question: Do they really need to cost that much?
Although there are many different hearing aid brands available for purchase, six firms control a vast share of the market: WS Audiology (that manufactures Insignia, Widex, and Rexton), Amplifon, Sonova (Phonak and Unitron), GN (ReSound and Beltone), Demant (Oticon and Philips), and Starkey.
These giants also own subsidiaries dedicated to managing hearing coverage in insurance, even writing Medicare Advantage plans for insurers such as Cigna and Aetna. The firms maintain control via a patent pool, the Hearing Instrument Manufacturers Patent Partnership, in which these large market players share essential patents, making it much harder for small and generic brands to succeed.
To contextualize this hearing aid patent pool, journalist Matt Stoller likens it to a 1900s patent pool between J.P. Morgan, GE, and Westinghouse, a pool that prevented competitors from producing electronic utilities.
Adding to the limited competition, a person is required by the FDA to obtain a prescription for hearing aids. To some extent, this limitation makes sense. Anyone who has ever worn hearing aids is familiar with the extensive adjustment and fitting that requires an audiologist. However, the advanced technology of modern hearing aids allows a person to easily make their own adjustments via a smartphone.
This is not to diminish the importance of audiologists, who still play an important role in assisting those with hearing issues. Rather, the prescription model poses yet another barrier that adds to costs and prevents competition.
As well as stifling competition, the big six hearing aid firms — beyond manufacturing hearing aids — own key players further down the supply chain. Stoller notes how WS Audiology owns both TruHearing and Hearing Care Solutions, two entities that provide hearing aid benefit solutions for Medicare Advantage insurers.
He writes, “If you have health insurance with, say, Aetna, and you need a hearing aid, Aetna will send you to a hearing aid manufacturer to tell you whether you need a hearing aid. Surprisingly, they often answer, ‘Yes, and you need an expensive one!’”
Beyond insurance and health plans, the big manufacturers also own their own satellite hearing aid clinics and affiliate networks of audiologists. While most audiology clinics have independent names, they are often tied to specific manufacturers (which are in turn tied to certain health plans).
To build upon Stoller’s example, if a person is on an Aetna Medicare Advantage plan (with a hearing benefit run by a WS Audiology subsidiary), then their plan will likely only cover services administered by a WS Audiology-affiliated audiology clinic. The latter will then offer one of their proprietary hearing aid brands.
Now, this is not to say that Signia and Widex hearing aids are inferior products — through our extensive testing, we know their products work well – but rather to point out the glaring conflicts of interest at play.
The result is a system that is not driven by optimal hearing health outcomes for people. As Stoller describes it, the big six firms “aren’t competing based on price or quality, but based on who can be in charge of allocating market share.”