Again, at what level of fraud do we consider defunding if not now? When 90% is irreproducible crap? 95%? 98%? Yes, you will lose out on 'healthy tissue'. That damage is necessary when the cancer is spreading.
Press your face against the glass, and it's much more complicated. The institutions that we have made for funding science don't reliably channel money towards the best ideas. All the experts in the field have figured out how to work the system well enough to build lives for themselves, and this leads to the tautology that "experts" support the status quo. We don't consider someone an expert if they aren't thriving in the current institutions.
Anytime someone mentions new institutions e.g. prediction markets that might better allocate funding, or even enrich the best scientists, there is a visceral backlash.
I'd also suggest that lower scientific funding levels exacerbate the problems with the current system - risky research is less likely to be funded, as are new investigators, etc. Large, established labs are also better able to weather the storm.
Like the vast majority, everyone had to focus more on financial survival than was ever imaginable before, and this permeated the universities also and was never recovered from. This is when the reliance on foreign students began to skyrocket too.