Can Apple Passwords require Apple ID authentication instead of device passcode?

No, your Passwords are encrypted with the device passcode not only on your device, but also in your backups. If just the Apple Account password was needed to remove the encryption, then that would defeat the purpose of encrypting the data at all. For example with just the Apple Account password you can restore a backup to a device, but since the Passwords are encrypted with the Passcode, it is not possible to restore those without providing the Passcode that encrypted them.

You can certainly send feedback to Apple here with your request for another option:

Product Feedback - Apple

A person that knows the passcode to your device has much more information than what you may realize. If you do not trust them with your Passwords, I also would be concerned about some of the other data they have access to and can do from my phone:

• Make purchases with cards in your wallet.
• Send money to anyone
• Share your location data to track you
• Change your Apple Account password and even lock you out of your own device
• View website history
• View call logs
• View messages
• Add another Fingerprint or Alternate Face in Settings that would then be used for Chrome biometric access to their passwords.