LostGeneration - it can mean both as its literal meaning is 'to save'. But the sense of the verse implies a physical sickness, or else why mention sin as a possibility too, as you say. The Greek word is sosei, and is used also for Christ healing people of illness. Contextually, you have to be reading James with tinted glasses to take the meaning as not being similar to eg Matthew 9 (NWT version), have bolded where the same word is used.
Then Jesus got up and, with his disciples, followed him.20 And look! a woman suffering for 12 years from a flow of blood+ approached from behind and touched the fringe of his outer garment,+ 21 for she kept saying to herself: “If I only touch his outer garment, I will get well.” 22 Jesus turned around and, noticing her, said: “Take courage, daughter! Your faith has made you well.”+ And from that hour the woman was made well