Hearing is complex: you have the cochlea acting as both sensor and first pass signal processing. There's a muscle that acts as a built-in gain control that can cut sounds by about 20dB, partly so your own voice doesn't deafen you.
Hearing damage isn't just loss of sensitivity—apparently it can alter the shape of cochlear filters' response too, changing the way masking works. And I'd imagine the brain tries to compensate as hearing loss progresses, which could have interesting effects.