No, that's not the actual reason! The reason the rule exists is because, when HIPAA was passed, electronic patient health records were a new thing, and they were desired both for cost savings (electronic records as a way to drive administration costs down were a huge thing in the 1990s) and so the USG could combat Medicare fraud. The confidentiality rule was designed to ease the acceptance of electronic records; that's all. That's why the rule refers to e-PHI.
You’re correct regarding historical procedure, but with regards to the privacy rule, which was added shortly after its creation and at least online is much of why the act is known and discussed today, the rule exists to, quoting the government’s description,
> The Rule requires appropriate safeguards to protect the privacy of protected health information and sets limits and conditions on the uses and disclosures that may be made of such information without an individual’s authorization.
We allow a major hole here in that protected health information by willfully careful readings of “appropriate safeguards” and “limits and conditions”, essentially because doing otherwise would be a nightmarish expense and pain.
HHS was authorized by statute to make a specific set of rules to address a specific issue. When we refer to "The Rule", we're referring to HHS's rulemaking process, which is governed by the statute, which spells out what the rule is about.
