No, the password encrypts the file. The paper backup is not encrypted - after all the most common use for the backup is to recover from a forgotten password 
If having a paper with all your bitcoins on it worries you, then Armory is one of the very few wallets that offers a 2-of-3 backup. You can print the three different sheets of the 2-of-3 backup, and store them in three safe places. If a thief gets any of them, it does not help him. If you lose the computer with the wallet, you need to get any two of the three backups, and can use them to recover the wallet.
If having a paper with all your bitcoins on it worries you, then Armory is one of the very few wallets that offers a 2-of-3 backup. You can print the three different sheets of the 2-of-3 backup, and store them in three safe places. If a thief gets any of them, it does not help him. If you lose the computer with the wallet, you need to get any two of the three backups, and can use them to recover the wallet.