Heat a large skillet over medium-high heat. Cook and stir sausage in the hot skillet until browned and crumbly, 5 to 7 minutes; drain in a colander and discard grease.
Transfer sausage to a large saucepan.
Stir 1 package taco seasoning into sausage and cook over medium heat until fragrant, about 5 minutes.
Add 2 cups water and remaining package taco seasoning. Stir until seasoning is dissolved; simmer for 5 minutes more. Reduce heat to low.
Gradually add cheese food, stirring until cheese is evenly melted, 5 to 7 minutes.
Mix hot sauce into melted cheese mixture. If the mixture becomes too thick, add remaining 1 cup water, as needed.
