Are DRGs just? This is the primary question which this essay will answer. But there is a prior methodological question that also needs to be addressed: How do we go about rationally (non-arbitrarily) assessing whether DRGs are just or not? I would suggest that grand, ideal theories of justice (Rawls, Nozick) have only very limited utility for answering this question. What we really need is a theory of “interstitial justice,” that is, an approach to making justice judgments that is suitable (...) to assessing the social practices and institutions that comprise the interstices of our social life as opposed to its basic structure. Rawls's appeal to “our considered moral judgments” provides us with a useful starting point for this task, which we shall discuss in the first part of this essay. In the second part, we shall actually assess DRGs from the perspective of interstitial justice. What we shall show is that DRGs violate a large number of our considered judgments regarding a just approach to financing health care for the elderly in a cost-effective manner. This is true to such an extent that efforts to reform DRGs and make them fairer, such as the recent effort by Robert Veatch, should be abandoned. In the concluding section of the essay we discuss one especially pernicious feature of DRGs, namely, that they represent an invisible approach to rationing access to health care. In the minds of many this is one of the virtues of DRGs. That claim needs critical examination. (shrink)