Germany’s sickness funds (Krankenkassen) are legally private, but function as public-law corporations with a social mandate. So, sickness funds are not government agencies, but they are self-governing public entities created under federal law. They must follow detailed regulations in the Social Code Book V (SGB V), which sets rules for benefits, contributions, and financial management. They are nonprofit, meaning any surplus must go back into the system (such as improving services or lowering premiums).
Each fund has its own board, made up of representatives of employers and employees, who oversee operations and negotiate with health care providers. Although they compete for members, the competition happens within a tightly regulated framework — they all must offer the same basic benefits package defined by law, and their risk adjustment mechanisms prevent “cream-skimming” of healthy members. So, while they are legally independent and not state-run, sickness funds are part of the public health insurance system, a public-private hybrid designed to blend solidarity, accountability and efficiency.