Peel and slice potatoes and arrange in casserole dish. Cook covered, 10 minutes, turning dish once (in microwave).

In glass measure cup, chop onion and mix with 1 tablespoon butter. Cook onion and butter in microwave for 4 minutes. (Stir around 2 minutes.) Stir in 2 tablespoons flour, then 1 cup milk, salt and pepper. Cook 3-5 minutes, uncovered. Stir in cheese. Pour over cooked potatoes and stir. Add more cheese, if necessary. Note: Add ham if desired.