You should absolutely address it regardless of what residency you apply to. Sounds like it was an isolated incident and something you managed to correct going forward. You have a good step 1 score and have done well on your clerkships so far, so you are otherwise a good solid applicant. A strong Step 2CK score would be a nice addition to further demonstrate that your previous failure was merely a bump on an otherwise smooth road.
I would address it but make it brief and make sure you have multiple people read it to rid it of any whiff of excuse-making. A big factor will be what the "health" reasons were for choosing it. If they are mental health reasons, then best not to mention it; anything physical you should definitely mention. Ditto for maybe some specifics about your family situation at the time as well. If non-mental health issues, start with saying you took the part time track and give the specific reasons; if mental, just keep it a bit more vague and focus soley on the family stuff and omit your personal health reasons. Basically 1-2 sentences laying the groundwork that you entered medical school intending to do 5 years.
Follow that part with a line about the anatomy failure, say that you took measures to adjust your study approach and repeated it the next year along with the other half of your M1 courses. Then go on to talk about how your new and improved approach to your classwork worked well in M2, led to a good step 1, lots of good wards stuff, etc. Keep the bulk of your statement about all the other positive things about you and what you love about IM.
The biggest thing people worry about with a story like yours - a random blip of failure on an otherwise solid record - is the it suggests underlying mental health or substance abuse problems. I'm not implying this is the case here since I obviously don't know you, but that is why my spidey sense always jumps to with stories like this. It's what every PD's sense will jump to as well. Unfortunately, there's not a lot of understanding for mental health issues in medicine despite so many people in the field personally afflicted by it.
Another important factor will be getting some solid letter writers and making sure some/all of them know about the earlier failure so they can comment on how awesome you are, how reliable, how professional, etc.