Saute the green pepper in the butter, then blend in the flour and seasonings. Gradually add the milk and cook, stirring constantly, until thickened. Add 1 1/2 cups of the Cheddar Cheese and stir until melted. Add the macaroni and ham, blending well, and pour into a 1 1/2-quart casserole. Top with the remaining Cheddar Cheese and continue to bake until it melts.