Objectives: Spending on public health and prevention strategies varies widely across states and communities. The Patient Protection and Affordable Care Act of 2010 (ACA) authorized the largest expansion in federal public health spending in decades, with the goals of improving population health and helping to moderate growth in medical care spending. To produce evidence needed to inform these investments, this study (1) estimates the effects of public health spending patterns within communities on preventable mortality and subsequent medical care spending; and (2) uses the methods of local instrumental variables developed by Heckman and Vytlacil and Basu to estimate how the health and economic effects of public health spending vary across communities. Methods: A longitudinal cohort design is used to analyze changes in spending patterns and population health within service areas of the nation’s 3000 local public health agencies over a 17 year period. The National Association of County and City Health Officials (NACCHO) collected data on the organizational and financial characteristics of these agencies through census surveys fielded in 1993, 1997, 2005, 2008, and 2010. We linked these data with contemporaneous information on community characteristics, federal and state spending, cause-specific mortality rates, and area medical spending estimates from the Dartmouth Atlas. Multivariate regression models for panel data are used to estimate how changes in public health spending influence mortality from preventable causes and subsequent medical care spending levels, using instrumental-variables to control for unmeasured factors that jointly influence spending and health. The local instrumental variables estimation technique developed by Heckman and Vytlacil (1999) and Basu (2013) is used to generate community-specific effects of public health spending and to explore differences in these effects across communities based on (1) socioeconomic status within the community as measured by household income per capita; and (2) the scope of public health activities supported within a community. Results: Infant mortality and deaths due to cardiovascular disease, diabetes, cancer, and influenza fell by between 0.5 percent and 4.3 percent for each 10 percent increase in public health spending (p<0.05) over 17 years. Similarly, increases in public health spending were associated with significant reductions in the rate of growth in medical care spending per person, with elasticity estimates ranging from -0.09 to -0.17 depending on the assumed lag periods. The health and economic effects of public health spending were 21-44% larger in low-income communities (bottom 20%) as compared to the average community. Moreover, communities that used resources to support a broader scope of public health activities experienced larger mortality reductions and medical cost savings. Lag periods of 5-10 years produce the largest effect sizes. Conclusions: Communities with larger growth public health spending experienced larger reductions in mortality from leading preventable causes of death and slower growth in medical spending over time. Differences in community socioeconomic status and in the mix of public health services offered appears explain much of the community-level heterogeneity in spending impact.