You can't look at one monster and go "it sucks", unless it's a solo. The hag, in its role, is a frightening, incredibly dangerous monster, as the others have pointed out. It doesn't deal massive damage, because that's not its job - it keeps you busy. And it does that brilliantly. If the hag does its job, you have two choices: Ignore it and take ~10 damage a round, and have your main attacker suffer -2 to attack; or, attack it, and spend round after round hacking it apart, getting blasted by artillery monsters.
Consider a pair of death hags and a couple of night hags, just a few hundred xp above a level 16 encounter for four PCs. The death hags are attacking your fighter and, say, rogue. They can't heal, and even an average of 11.5 damage a hit will wear away - a level 16 fighter with 15 Con has 120 hp.
Meanwhile, the night hags open up with a blast that deals ~7 damage, and party members may be taken out of the fight. Then, they deal an average of 14 damage, a maximum of 22. You may be conditioned to 3.5, but in 4e, 15-20 damage hurts. Consider that that's 1/8th to 1/6th of the fighter's hp, gone. Should he hit the wizard, he could be down around a quarter of his hp each round.
So, yeah, the death hag, by itself, is useless. If you fight it by itself, your DM's stuffed up.