Ham and Swiss Cheese Soup

3 1/2 cups potatoes, peeled and diced
1/3 cup onion, finely chopped
1 - 2 cups cooked ham, diced
3 1/4 cups water
2 tablespoons chicken bouillon
Salt, to taste
1 teaspoon pepper
5 tablespoons butter
5 tablespoons flour
1 can evaporated milk (add enough regular milk to make 2 cups)
1 cup Swiss cheese, shredded
1 cup Monterey Jack cheese, shredded

Combine potatoes, onion, ham, water, and bullion in a pot and bring to a boil.  Cook over medium heat until potatoes are tender.  Stir in salt and pepper.  In a separate saucepan, melt butter over medium heat. Whisk in flour and cook, stirring constantly, until thick.  Slowly stir in milk so lumps do not form until all the milk is added.  Continue to stir until thick.  Add in cheese and stir until melted.  Stir the cheese mixture into the ham and potato mixture and cook until heated through.