You're referring to the privacy rule, which is only part of the law (and not its primary prupose). The original intent of the law was to ensure easy transfer of information to keep health coverage when changing jobs. The privacy rule was not even part of the original law, it was added by HHS 3 years later. See more details here: https://www.ncbi.nlm.nih.gov/books/NBK9576/

The article you cited states congress was aware of privacy concerns at the time and covered them as part of the third stated provision.